Different Types of Outsourcing

A Brief History of Outsourcing

For almost two decades already, companies relied on outsourcing as a go-to business strategy.

According to several authors, the term ‘outsourcing’ was created by economist Ronald Coase in 1937. Outsourcing emerged in the 1950s, but it was not considered a valid business strategy until the 1980s.

During the 1970s, manufacturing companies did seek for more efficient production and began hiring outside firms to manage less-than-essential processes. As the 1980s rolled out, several other services were outsourced.

Nowadays, outsourcing of business functions is perceived as an attractive business strategy. Even during the two years of Pandemic, outsourcing has been stable and has even evolved to cope up with the companies’ needs.

Listed below are the Most common typeS of Outsourcing and their definition

1. Professional Outsourcing

Professional outsourcing is a process where you hire individual to do a complex task for your business – including accounting, bookkeeping, purchasing, administration, and legal. This requires training and a professional license to accomplish.

2. Project Outsourcing

The Project Outsourcing is an outsourcing for a project-based type only as the name suggests itself. This is done if there are no available employee to finish the task. Some types of project outsourcing include website redesigning, one time video or photo editing, creation of a large piece of content, transcription, and marketing promotions.

3. IT Outsourcing

This is the type of outsourcing that involves the task designated for IT specialists. IT Outsourcing may be a contract-based service and tasks may include the IT support to maintain security, keep licenses of the software up to date, and oversee the company’s networks, and this is an affordable way to receive those services without hiring an in-house IT which will cost you a lot less.

4. Manufacturer Outsourcing

This is applicable to business that produces physical products. Manufacturing Outsourcing is the process of hiring a third-party company that will help you produce your goods at a cheaper price than inhouse. In this way, you will cut a huge cost on the production operation, machineries and materials, and personnel.

5. Business Process Outsourcing

This is the most common type of outsourcing. Business Process Outsourcing (BPO) is option to hire people to process repetitive tasks of a business firm. Lead generation, scheduling client appointments, and customer service are some of the common tasks for this type of outsourcing industry.

Regardless of the types of outsourcing you need; you need to be aware of functions that you wanted to outsource. Know the pros and cons and how you can deal with them. It is important to have a great communication from the very start. Once you are ready, you can choose the appropriate third-party company that will assist your business in growing.

What’s the Future of Outsourcing?
History has shown that outsourcing is the way to a more productive and cost-efficient business strategy. It is expected to continue growing amidst the pandemic and continuous advancements in technology.

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