Outsourcing is
the process by which business process are contracted to another
party. Outsourcing includes domestic and foreign contracting. The
business activities that can be outsourced include payroll,
accounting, etc. Outsourcing is of two types. They are:-
- Back office outsourcing - this include internal business
function and organization services.. Example- billing.
- Front office outsourcing - this include customer service and
deals with customer interaction.. Example- marketing.
The three advantages of outsourcing include:-
- It helps in cost
saving and time saving by outsourcing the business
activity to the third party. In order to perform particular
activity, organization needs to recruit, train, develop employees
with specific skills which require both money and time. Outsourcing
this activity to third party will help the organization to save
money and time and to utilise the same on core business. Example -
company outsourcing the telemarketing to third party who are expert
in this field.
- It helps in improving the speed and efficiencies
of the business process that is outsourced. The third
party perform that particular task that has been outsourced by the
organization as they have the skills that is required to fulfill
that specific business activity. Since they are expert in this
field, it will help in improving the the speed and efficiency of
the process. Example - helpdesk service are being outsourced to
provide fast and quality service to the customers.
- BPO provides accessibility to
advanced
technology. This helps in improving the quality of service
because of the latest technology integrated in business process.
This makes the organization efficient and effective. Example -
company outsourcing market research activity to the third party
which use latest technology to provide fast and accurate
results.