What is outsourcing in simple words? Outsourcing: definition, meaning, types and examples

One of the good ways to increase the efficiency of the work process and achieve greater efficiency from staff is the principle of the division of labor. True, not all enterprises can afford to create a large staff of narrow-profile specialists, because their salaries are far too big. Such organizations have an excellent alternative: they can delegate (delegate) to a representative of another organization some functions that are not of key importance. This delegation is the answer to the question, what is outsourcing. In simple words, the process can be described as involving a specialist from outside.

Features of outsourcing

Outsourcing company, which is accepted for the implementation of these duties, concludes an agreement with the company-customer. Long-term cooperation is of interest to both enterprises, as it is mutually beneficial.

There are full and partial outsourcing. What is this in simple words:

1. Full - outsourcing company assumes the performance of all functions in any area.
2. Partial - the employees involved must only conduct certain procedures or activities.

Despite the fact that this concept is relatively new for domestic businessmen, many have already managed to assess how convenient and economical is outsourcing. What it is? Kinds and examples can be resulted the following: attraction of firm for full service of computers of the enterprise is a full outsourcing. At the same time, partial transfer of repair duties or monitoring of software status is performed, and other tasks remain for a staff member.

What is outsourcing: in simple terms about the types of outsourcing

In the course of modern enterprises, there may be a need for the following types of outsourcing:

• The production is to transfer another organization to perform any production task. As an example, you can cite most advertising agencies. They entrust printing of printing products to specialists (banners, flyers).

To save on buying additional equipment and expanding its capabilities to such enterprises, it is extremely important to know what outsourcing is. In simple words, this concept can be described as a reasonable economy.

• In the field of IT, this type of outsourcing involves the involvement of organizations to create sites, maintenance equipment, which is at the disposal of the enterprise-customer or for the development of some kind of software with its subsequent support.

A good example is retail chains of shops that do not contain programmers in the staff, and on a contract basis attract an outsourcing company to create and maintain their websites.

• In the field of business processes, if you need to regularly perform small amounts of work with documents or with personnel, an appropriate outsourcing company is involved. What is it in simple words? This is an accountant, economist or business coach, not included in the number of permanent employees of the enterprise. Hired professionals perform work related to the calculation of wages, accounting, legal or consulting services, audit, selection of personnel.

Advantages of outsourcing

Among the advantages of such a phenomenon as outsourcing, the elementary opportunity for the company to focus its efforts on the maintenance of core activities. That is, an enterprise can only deal with its own production without distraction for secondary tasks (for which experts are invited).

Also important is the significant cost savings. It is due to the fact that it is possible to reduce investments in resources and to abandon the training and maintenance of unclaimed employees.

Thus, outsourcing becomes an essential factor of economy. What is it in simple words: the invited specialist works faster and better. Some enterprises report a 20% reduction in costs. In addition, new ways of strategic partnership open new opportunities for all participants.

Disadvantages of outsourcing

One of the drawbacks of this type of activity is a certain dependent position, in which the company-customer enters. The emergence of any difficult situation (economic or production) from a provider of third-party services affects the work of their client.

In addition, there may be dissatisfaction with the permanent employees of the enterprise, who are forced to make a management decision to engage in outsourcing. What it is, the definition, meaning and features have been discussed above, but the human factor has not been taken into account. Sometimes incoming employees can be regarded as competitors or job applicants.

Also a significant shortcoming of outsourcing is the need to provide third-party enterprises with confidential information about the enterprise.

Outsourcing - business

Having understood that such outsourcing (in simple words - delegation), it is possible to consider some aspects of the organization and functioning of the outsourcing company.

According to many owners of their own companies, this type of activity is rather profitable, profitable and promising. In addition, the formation of such a company does not require such large sums of money as traditional business.

Initial investments are necessary for payment of rent of a premise, registration of the documentation, purchase of office engineering and the equipment. Also, an important cost graph is the selection and maintenance of qualified personnel, the promotion of a newly formed firm. The traditional practice of doing business was to attract invested funds. This step is taken by entrepreneurs who do not have the required amount to form a company.

Investors can be either private individuals or other enterprises or banking institutions.

Personnel - the main resource of the outsourcing company

Proceeding from the fact that the organization that "leases" its employees receives a reward for the work done by them, its personnel should be well-trained, competent, competent and well-versed in their field.

When searching for staff, the following list of requirements is put forward for applicants:

• Profile education.
• High level of competence and responsibility.
• Sufficient experience in conducting relevant activities.
• Communicative.

What is Outsourcing and Outstaffing: Differences in Concepts and Terminology

Such seemingly similar concepts really have much in common. However, in practice these are different forms of work organization and the main differences are listed below:

• In the form of labor, outsourcing is the hiring of a performer to perform a specific task from "A" to "I". Outstaffing is a short-term stay of a freelancer at the company's disposal. During this period, the new employee is engaged in tasks assigned to him.
• For outsourcing documentation, a contract is signed , while outstaffing is considered a classic job placement.
• It is customary to outsource the implementation of many intellectual tasks related to the accounting or legal aspects of business, and in outstaffing tasks can carry almost any character.
• The difference is also in the payment of labor: with the outsourcer are calculated, when all the work is done, and for the employee with outstaffing, the staffing schedule is applied.

Conclusion

Thus, it can be concluded that a new word and a new concept serves many entrepreneurs in various fields of business. To improve the profitability of production, reduce the cost of maintaining staff and expand their own horizons of the organization and apply outsourcing staff. What it is in simple words can be described by several synonyms: delegation, transfer of duties, outsourcing.