Outsourcing
Outsourcing refers to a company that contract another company to provide services that might otherwise be performed by in-house employees. Many large companies now outsource jobs such as call center services, e-mail services, and payroll. These jobs are handled by separate companies that specialize in each service, and are often located overseas.
Reasons and Advantage…
There are many reasons that companies outsource various jobs, but the most prominent advantage seems to be the fact that it often saves money. Many of the companies that provide outsourcing services are able to do the work for considerably less money, as they don't have to provide benefits to their workers and have fewer overhead expenses to worry about.
Outsourcing also allows companies to focus on other business issues while having the details taken care of by outside experts. This means that a large amount of resources and attention, which might fall on the shoulders of management professionals, can be used for more important, broader issues within the company. The specialized company that handles the outsourced work is often streamlined, and often has world-class capabilities and access to new technology that a company couldn't afford to buy on their own. Plus, if a company is looking to expand, outsourcing is a cost-effective way to start building foundations in other countries.
If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all this and more. In outsourcing, the advantages of outsourcing are more than the disadvantages of outsourcing. The pros of outsourcing have driven more organization to step into offshoring and experience the benefits that it has to offer.
Disadvantage…
There are some disadvantages to outsourcing as well. One of these is that outsourcing often eliminates direct communication between a company and its clients. This prevents a company from building solid relationships with their customers, and often leads to dissatisfaction on one or both sides. There is also the danger of not being able to control some aspects of the company, as outsourcing may lead to delayed communications and project implementation. Any sensitive information is more vulnerable, and a company may become very dependent upon it’s outsource providers, which could lead to problems should the outsource provider back out on their contract suddenly.
While outsourcing may prove highly beneficial for many companies, it also has many drawbacks. It is important that each individual company accurately assess their needs to determine if outsourcing is a viable option.
The disadvantages of offshoring give organizations an opportunity to think about what they are stepping into. However the disadvantages of outsourcing are less than the advantages of offshore outsourcing. When outsourcing, you might not experience any of these disadvantages of offshoring, if you find a reliable outsourcing partner. Before outsourcing take the interests of your customers and employees into consideration and then make an informed decision. If your organization is genuinely interested in outsourcing, let not the disadvantages of outsourcing stop you.
http://www.outsource2india.com/why_outsource/articles/advantages-disadvantages-outsourcing.asp
Does Outsourcing Really Save Money?
Outsourcing is the practice of relocating certain parts or all of business off the shores of the country in which the business is located. Many companies employ this practice as a cost-saving device, and it undoubtedly can save money. This issue however is greatly complicated by all of the factors involved, and it’s valuable to look at how locating most business to foreign shores may save and cost money at the same time.
First, not all outsourcing goes to countries that have lower costs. Some countries relocate plants, stores, and facilities in countries that have higher costs but may have tax advantages. Typically, the practice involves using countries where costs to employ people and to rent or own facilities to house employees is significantly lower, and there may also exist tax advantages for employing large numbers of people within that country.
In highly industrialized countries, costs of wages and of facilities can be high, and companies may pay a fraction of this price elsewhere, while still employing workers who are just as skilled. For companies looking to cut expenses, outsourcing can be a viable means of accomplishing this, while still allowing a company to pay for more expensive employees in the country in which it was established. Many businesses have a combination of local employees and outsourced employees, while others relocate most business to foreign shores.
There have been some negative reactions to companies that outsource all aspects of their business. For instance, many businesses chose to relocate customer help lines to foreign countries and then some found this practice was not working well. People being helped by these lines weren’t getting the kind of service they required to remain customers, and some companies have chosen to stop outsourcing help line and customer service work to better serve customers. The bottom line is that if customer dissatisfaction mitigates cheaper employee costs, then outsourcing doesn’t save money.
Another way to evaluate outsourcing is by the way it affects the local economies in the main countries in which a business operates and depends on sales of products or services. Eliminating jobs from a country impacts its economy and the buying power of consumers. While outsourcing might result in being able to offer products at lower prices, number of customers and consumer spending decreases when jobs are not available. This is a common criticism of the practice.
When companies begin to outsource so much that unemployment rises and the general economy falters, these companies may be unable to make money. In other words, they may create a situation where no consumers exist to buy their products, no matter how inexpensive they are. It’s ultimately argued that decline in consumer buying power can cost companies money, far more than they’d save by outsourcing.
What companies that outsource must weigh is not just the short-term savings but the potential long term costs and possibly benefits for both itself and the society at large.
The Benefits of Outsourcing
Do you want to maximize your revenue and minimize your expenses?
Do you want to get access to specialized skills and services?
Do you want to concentrate more on your core business?
Do you want to save on money, time and infrastructure?
1. Cost Advantage
Outsourcing to countries such as India can give you access to cost-effective services. The same services with the same level of quality are offered in India for a much lower cost! This cost-advantage has increased the number of services that are being offered to India. Services such as call center services, teleradiology, medical billing, etc can help you save up to 60% of your total costs when outsourced! Getting access to high-quality services at a cost-effective price is the biggest benefit that you can get while outsourcing. Outsource and reap the benefits of outsourcing.
2. Save Big!
One of the benefits of outsourcing is that you can save on every aspect of your business and increase your profits. When you outsource, you can save on time, effort, infrastructure and manpower. Since you don't have to invest in infrastructure, you can also save on making unnecessary fixed investments. Outsourcing removes the burden of changing or maintaining infrastructure. You can also save on capital expenditure. Outsourcing can also help you save on training costs, because you do not have to invest in manpower. These savings will help bring about an increase in your revenue. Your organization can also save on investing in expensive software and technologies.
3. Get access to specialized services
By outsourcing you can get expert and skilled services. This benefit of outsourcing has been the key reason why several outsourcers opt for outsourcing. The function that you outsource may not be your core competency but you can find an outsourcing partner who is specialized in that particular business process. Your outsourcing partner will be able to provide more proficient services. This is yet another benefit of outsourcing, because if you perform all your business processes in-house, you will not be able to provide specialized and skilled services. Outsourcing can give you this advantage.
4. Concentrate more on your core business
One of the benefits of outsourcing is that your organization will be free to concentrate on your core business. By outsourcing all your non-core functions, your employees can be put to better use and you will be able to see a huge growth in your core business.
5. . Benefit from time zone advantages
Outsourcing to countries such as India has a time zone advantage. Your night will be India's day. With this advantage, your outsourcing partner can complete critical work and send it to you the next day. Thus, your work is continued by your outsourcing partner even after your employees go home. This enables the work to be completed much faster and gives your business a competitive advantage. This is one of the benefits of offshore outsourcing.
http://www.outsource2india.com/why_outsource/articles/benefit_outsourcing.asp
Insourcing? What is it?
Insourcing is the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity that specializes in that operation. The term insourcing is newer, and has several definitions that aren’t exactly the opposite of outsourcing, which can be somewhat complicated to understand.
The type of insourcing that represents almost an opposite form of outsourcing may be the most common definition. This is when companies look at their pool of employees to find those who may be tapped to do certain needed jobs. They may offer these employees extra training or they may merely find the employees that already possess the skills to take on specialty work.
This form of insourcing has become fairly common as a money saving practice. Hiring new employees can take considerable funds, and being able to redirect a current employee to new work can be much easier. Even if there is financial outlay for special training, a business may still save money, and it doesn’t have the negative connotations associated with many forms of outsourcing. Some companies practice this regularly and may boast to employees that they always promote from within, which can be an attractive point when employees are looking for jobs that will allow them opportunities to advance in their careers.
A different form of insourcing doesn’t utilize current employees but instead temporarily hires specialists to work onsite at a company. Occasionally these specialists help train employees on specialized equipment or methods, and part of this may also involve the leasing of various types of equipment. Even though the temporary employee comes from outside of the company, the fact that he or she is “brought in” means he can be considered insourced.
Sometimes the definition of insourcing is a matter of perspective. When a large company sets up part of their business in a foreign country, that company is outsourcing. However, to the country where the business is established, the new work there may be considered as insourced.This is a less common use of the term, but one that may help demonstrate the differing ways in which outsourcing work is viewed.
Insourcing is widely used in an area such as production to reduce costs of taxes, labor (e.g., American labor is often cheaper than European labor), transportation, etc.
Insourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is insourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.
Sources:
http://www.prospects.ac.uk/p/types_of_job/it_consultant_job_description.jsphttp://en.wikipedia.org/wiki/Infrastructurehttp://dictionary.reference.com/browse/infrastructurhttp://www.wisegeek.com/does-outsourcing-really-save-money.htmhttp://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
To Outsource Or Insource?
Outsourcing can provide technological advantages but loss of control is a problem.
As companies have grown more comfortable with the shared service approach, some have asked whether it makes sense to move a step further and hire an outside party to run the operation, says Tim Lloyd, partner with London-based ALS Consulting Ltd. On the positive side, a third party that focuses only on shared services may be more likely to invest in new tools and technology. Going with a third party also may enable a company to more quickly launch a shared service operation.
On the other hand, some loss of control is likely. Executives wouldn't want to outsource functions that are unique to their company, notes Richard Sypniewski, practice director for accounting and finance operations with Parson Consulting, Chicago. For instance, a company that produces highly engineered products may negotiate individual contracts with each client. Before management transfers responsibility for accounts receivable to an outside firm, it will want to determine how much information the firm will need, and the extent to which the firm will be able to act on its own when working with clients.
Know When to Send Projects out the Door
With many companies shipping work to India, Russia, and other parts of the globe, offshore outsourcing has been the hot topic in tech circles recently.Yet many IT managers are finding that when it comes to getting outside help, assistance is usually much closer to home.
With IT budgets tight and staff members overburdened, hiring consultants or other outside experts can be a boon for productivity and a way to keep operations running smoothly. Certainly, too, there are plenty of independent gurus eagerly waiting for business and ready to rent out their expertise. Frequently outsourced work includes data backup and recovery services, training, recruitment, application development integration, and project management.
The decision about whether to outsource work is only the first step in a longer list of choices. IT managers must decide how they're going to use internal resources and how the outsourcing relationship will be managed.
Considering all of these direct and indirect costs, outsourcing may be a good solution. It allows you to instantly acquire the required skill set and quickly deploy an improved landing page.
Perspective
Thinking outside the box is difficult if you work in it. Your experience in your industry, company, and department conspire to straitjacket you with invisible assumptions. It's hard to throw away all of your biases and beliefs and come up with truly original approaches to testing.
http://searchenginewatch.com/3630742
What's best for your Organization?
Outsourcing…
Outsourcing began in the early eighties when organizations started delegating their non-core functions to an external organization that was specialized in providing a particular service, function or product. In outsourcing, the external organization would take on the management of the outsourced function.
Most organizations choose outsourcing because outsourcing offers a lot of advantages. When organizations outsource to countries like India, they benefit from lower costs and high-quality services. Moreover organizations can concentrate more on core functions once they outsource their non-core functions. Outsourcing can also help organizations make better use of their resources, time and infrastructure.
In outsourcing, the outsourcer and the outsourcing partner have a greater relationship when compared to the relationship between a buyer and a seller. In outsourcing, the outsourcer trusts the outsourcing partner with vital information. Outsourcing is no longer confined to the outsourcing of IT services. Outsourcers in the US and UK now outsource financial services, engineering services, creative services, data entry services and much more.
Most organizations are opting to outsource because outsourcing enables organizations to access intellectual capital, focus on core competencies, shorten the delivery cycle time and reduce costs significantly. Organizations feel outsourcing is an effective business strategy to help improve their business.
Insourcing…
The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for insourcing because it enables them to maintain a better control of what they outsource. Insourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. Insourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for insourcing in order to cut down the cost of labor and taxes amongst others. The trend towards insourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards insourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by insourcing their work rather than outsourcing it. According to recent studies, there is more wok insourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and insource work equally.
Recommendation…
If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers.
If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverables, outsourcing is again a good option.
If your work involves production, then it would be more ideal for your organization to opt for insourcing, as you can save on transportation costs and exercise a better control over your project.
It is not necessary to choose outsourcing over insourcing or vice versa. Your organization can outsource and insource at the same time. By outsourcing and insourcing simultaneously, you can have the best of what both offers and your business can get a competitive advantage!
http://www.outsource2india.com/why_india/articles/outsourcing-versus-insourcing.asp
Outsourcing refers to a company that contract another company to provide services that might otherwise be performed by in-house employees. Many large companies now outsource jobs such as call center services, e-mail services, and payroll. These jobs are handled by separate companies that specialize in each service, and are often located overseas.
Reasons and Advantage…
There are many reasons that companies outsource various jobs, but the most prominent advantage seems to be the fact that it often saves money. Many of the companies that provide outsourcing services are able to do the work for considerably less money, as they don't have to provide benefits to their workers and have fewer overhead expenses to worry about.
Outsourcing also allows companies to focus on other business issues while having the details taken care of by outside experts. This means that a large amount of resources and attention, which might fall on the shoulders of management professionals, can be used for more important, broader issues within the company. The specialized company that handles the outsourced work is often streamlined, and often has world-class capabilities and access to new technology that a company couldn't afford to buy on their own. Plus, if a company is looking to expand, outsourcing is a cost-effective way to start building foundations in other countries.
If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all this and more. In outsourcing, the advantages of outsourcing are more than the disadvantages of outsourcing. The pros of outsourcing have driven more organization to step into offshoring and experience the benefits that it has to offer.
Disadvantage…
There are some disadvantages to outsourcing as well. One of these is that outsourcing often eliminates direct communication between a company and its clients. This prevents a company from building solid relationships with their customers, and often leads to dissatisfaction on one or both sides. There is also the danger of not being able to control some aspects of the company, as outsourcing may lead to delayed communications and project implementation. Any sensitive information is more vulnerable, and a company may become very dependent upon it’s outsource providers, which could lead to problems should the outsource provider back out on their contract suddenly.
While outsourcing may prove highly beneficial for many companies, it also has many drawbacks. It is important that each individual company accurately assess their needs to determine if outsourcing is a viable option.
The disadvantages of offshoring give organizations an opportunity to think about what they are stepping into. However the disadvantages of outsourcing are less than the advantages of offshore outsourcing. When outsourcing, you might not experience any of these disadvantages of offshoring, if you find a reliable outsourcing partner. Before outsourcing take the interests of your customers and employees into consideration and then make an informed decision. If your organization is genuinely interested in outsourcing, let not the disadvantages of outsourcing stop you.
http://www.outsource2india.com/why_outsource/articles/advantages-disadvantages-outsourcing.asp
Does Outsourcing Really Save Money?
Outsourcing is the practice of relocating certain parts or all of business off the shores of the country in which the business is located. Many companies employ this practice as a cost-saving device, and it undoubtedly can save money. This issue however is greatly complicated by all of the factors involved, and it’s valuable to look at how locating most business to foreign shores may save and cost money at the same time.
First, not all outsourcing goes to countries that have lower costs. Some countries relocate plants, stores, and facilities in countries that have higher costs but may have tax advantages. Typically, the practice involves using countries where costs to employ people and to rent or own facilities to house employees is significantly lower, and there may also exist tax advantages for employing large numbers of people within that country.
In highly industrialized countries, costs of wages and of facilities can be high, and companies may pay a fraction of this price elsewhere, while still employing workers who are just as skilled. For companies looking to cut expenses, outsourcing can be a viable means of accomplishing this, while still allowing a company to pay for more expensive employees in the country in which it was established. Many businesses have a combination of local employees and outsourced employees, while others relocate most business to foreign shores.
There have been some negative reactions to companies that outsource all aspects of their business. For instance, many businesses chose to relocate customer help lines to foreign countries and then some found this practice was not working well. People being helped by these lines weren’t getting the kind of service they required to remain customers, and some companies have chosen to stop outsourcing help line and customer service work to better serve customers. The bottom line is that if customer dissatisfaction mitigates cheaper employee costs, then outsourcing doesn’t save money.
Another way to evaluate outsourcing is by the way it affects the local economies in the main countries in which a business operates and depends on sales of products or services. Eliminating jobs from a country impacts its economy and the buying power of consumers. While outsourcing might result in being able to offer products at lower prices, number of customers and consumer spending decreases when jobs are not available. This is a common criticism of the practice.
When companies begin to outsource so much that unemployment rises and the general economy falters, these companies may be unable to make money. In other words, they may create a situation where no consumers exist to buy their products, no matter how inexpensive they are. It’s ultimately argued that decline in consumer buying power can cost companies money, far more than they’d save by outsourcing.
What companies that outsource must weigh is not just the short-term savings but the potential long term costs and possibly benefits for both itself and the society at large.
The Benefits of Outsourcing
Do you want to maximize your revenue and minimize your expenses?
Do you want to get access to specialized skills and services?
Do you want to concentrate more on your core business?
Do you want to save on money, time and infrastructure?
1. Cost Advantage
Outsourcing to countries such as India can give you access to cost-effective services. The same services with the same level of quality are offered in India for a much lower cost! This cost-advantage has increased the number of services that are being offered to India. Services such as call center services, teleradiology, medical billing, etc can help you save up to 60% of your total costs when outsourced! Getting access to high-quality services at a cost-effective price is the biggest benefit that you can get while outsourcing. Outsource and reap the benefits of outsourcing.
2. Save Big!
One of the benefits of outsourcing is that you can save on every aspect of your business and increase your profits. When you outsource, you can save on time, effort, infrastructure and manpower. Since you don't have to invest in infrastructure, you can also save on making unnecessary fixed investments. Outsourcing removes the burden of changing or maintaining infrastructure. You can also save on capital expenditure. Outsourcing can also help you save on training costs, because you do not have to invest in manpower. These savings will help bring about an increase in your revenue. Your organization can also save on investing in expensive software and technologies.
3. Get access to specialized services
By outsourcing you can get expert and skilled services. This benefit of outsourcing has been the key reason why several outsourcers opt for outsourcing. The function that you outsource may not be your core competency but you can find an outsourcing partner who is specialized in that particular business process. Your outsourcing partner will be able to provide more proficient services. This is yet another benefit of outsourcing, because if you perform all your business processes in-house, you will not be able to provide specialized and skilled services. Outsourcing can give you this advantage.
4. Concentrate more on your core business
One of the benefits of outsourcing is that your organization will be free to concentrate on your core business. By outsourcing all your non-core functions, your employees can be put to better use and you will be able to see a huge growth in your core business.
5. . Benefit from time zone advantages
Outsourcing to countries such as India has a time zone advantage. Your night will be India's day. With this advantage, your outsourcing partner can complete critical work and send it to you the next day. Thus, your work is continued by your outsourcing partner even after your employees go home. This enables the work to be completed much faster and gives your business a competitive advantage. This is one of the benefits of offshore outsourcing.
http://www.outsource2india.com/why_outsource/articles/benefit_outsourcing.asp
Insourcing? What is it?
Insourcing is the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity that specializes in that operation. The term insourcing is newer, and has several definitions that aren’t exactly the opposite of outsourcing, which can be somewhat complicated to understand.
The type of insourcing that represents almost an opposite form of outsourcing may be the most common definition. This is when companies look at their pool of employees to find those who may be tapped to do certain needed jobs. They may offer these employees extra training or they may merely find the employees that already possess the skills to take on specialty work.
This form of insourcing has become fairly common as a money saving practice. Hiring new employees can take considerable funds, and being able to redirect a current employee to new work can be much easier. Even if there is financial outlay for special training, a business may still save money, and it doesn’t have the negative connotations associated with many forms of outsourcing. Some companies practice this regularly and may boast to employees that they always promote from within, which can be an attractive point when employees are looking for jobs that will allow them opportunities to advance in their careers.
A different form of insourcing doesn’t utilize current employees but instead temporarily hires specialists to work onsite at a company. Occasionally these specialists help train employees on specialized equipment or methods, and part of this may also involve the leasing of various types of equipment. Even though the temporary employee comes from outside of the company, the fact that he or she is “brought in” means he can be considered insourced.
Sometimes the definition of insourcing is a matter of perspective. When a large company sets up part of their business in a foreign country, that company is outsourcing. However, to the country where the business is established, the new work there may be considered as insourced.This is a less common use of the term, but one that may help demonstrate the differing ways in which outsourcing work is viewed.
Insourcing is widely used in an area such as production to reduce costs of taxes, labor (e.g., American labor is often cheaper than European labor), transportation, etc.
Insourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is insourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.
Sources:
http://www.prospects.ac.uk/p/types_of_job/it_consultant_job_description.jsphttp://en.wikipedia.org/wiki/Infrastructurehttp://dictionary.reference.com/browse/infrastructurhttp://www.wisegeek.com/does-outsourcing-really-save-money.htmhttp://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
To Outsource Or Insource?
Outsourcing can provide technological advantages but loss of control is a problem.
As companies have grown more comfortable with the shared service approach, some have asked whether it makes sense to move a step further and hire an outside party to run the operation, says Tim Lloyd, partner with London-based ALS Consulting Ltd. On the positive side, a third party that focuses only on shared services may be more likely to invest in new tools and technology. Going with a third party also may enable a company to more quickly launch a shared service operation.
On the other hand, some loss of control is likely. Executives wouldn't want to outsource functions that are unique to their company, notes Richard Sypniewski, practice director for accounting and finance operations with Parson Consulting, Chicago. For instance, a company that produces highly engineered products may negotiate individual contracts with each client. Before management transfers responsibility for accounts receivable to an outside firm, it will want to determine how much information the firm will need, and the extent to which the firm will be able to act on its own when working with clients.
Know When to Send Projects out the Door
With many companies shipping work to India, Russia, and other parts of the globe, offshore outsourcing has been the hot topic in tech circles recently.Yet many IT managers are finding that when it comes to getting outside help, assistance is usually much closer to home.
With IT budgets tight and staff members overburdened, hiring consultants or other outside experts can be a boon for productivity and a way to keep operations running smoothly. Certainly, too, there are plenty of independent gurus eagerly waiting for business and ready to rent out their expertise. Frequently outsourced work includes data backup and recovery services, training, recruitment, application development integration, and project management.
The decision about whether to outsource work is only the first step in a longer list of choices. IT managers must decide how they're going to use internal resources and how the outsourcing relationship will be managed.
Considering all of these direct and indirect costs, outsourcing may be a good solution. It allows you to instantly acquire the required skill set and quickly deploy an improved landing page.
Perspective
Thinking outside the box is difficult if you work in it. Your experience in your industry, company, and department conspire to straitjacket you with invisible assumptions. It's hard to throw away all of your biases and beliefs and come up with truly original approaches to testing.
http://searchenginewatch.com/3630742
What's best for your Organization?
Outsourcing…
Outsourcing began in the early eighties when organizations started delegating their non-core functions to an external organization that was specialized in providing a particular service, function or product. In outsourcing, the external organization would take on the management of the outsourced function.
Most organizations choose outsourcing because outsourcing offers a lot of advantages. When organizations outsource to countries like India, they benefit from lower costs and high-quality services. Moreover organizations can concentrate more on core functions once they outsource their non-core functions. Outsourcing can also help organizations make better use of their resources, time and infrastructure.
In outsourcing, the outsourcer and the outsourcing partner have a greater relationship when compared to the relationship between a buyer and a seller. In outsourcing, the outsourcer trusts the outsourcing partner with vital information. Outsourcing is no longer confined to the outsourcing of IT services. Outsourcers in the US and UK now outsource financial services, engineering services, creative services, data entry services and much more.
Most organizations are opting to outsource because outsourcing enables organizations to access intellectual capital, focus on core competencies, shorten the delivery cycle time and reduce costs significantly. Organizations feel outsourcing is an effective business strategy to help improve their business.
Insourcing…
The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for insourcing because it enables them to maintain a better control of what they outsource. Insourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. Insourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.
Organizations involved in production usually opt for insourcing in order to cut down the cost of labor and taxes amongst others. The trend towards insourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards insourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by insourcing their work rather than outsourcing it. According to recent studies, there is more wok insourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and insource work equally.
Recommendation…
If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers.
If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverables, outsourcing is again a good option.
If your work involves production, then it would be more ideal for your organization to opt for insourcing, as you can save on transportation costs and exercise a better control over your project.
It is not necessary to choose outsourcing over insourcing or vice versa. Your organization can outsource and insource at the same time. By outsourcing and insourcing simultaneously, you can have the best of what both offers and your business can get a competitive advantage!
http://www.outsource2india.com/why_india/articles/outsourcing-versus-insourcing.asp
