What is Outsourcing?
Outsourcing is a business practice in which a company hires a third-party to perform tasks, handle
operations or provide services for the company.
The outside company, which is known as the service provider or a third-party provider, arranges for its
own workers or computer systems to perform the tasks or services either on site at the hiring company's
own facilities or at external locations.
Companies today can outsource a number of tasks or services. They often outsource information
technology services, including programming and application development, as well as technical support.
They frequently outsource customer service and call service functions. They can outsource other types
of work as well, including manufacturing processes, human resources tasks and financial functions such
as bookkeeping and payroll processing. Companies can outsource entire divisions, such as its entire IT
department, or just parts of a particular department.
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Outsourcing business functions is sometimes called contracting out or business process outsourcing.
Outsourcing can involve using a large third-party provider, such as a company like IBM to manage IT
services or FedEx Supply Chain for third-party logistics services, but it can also involve hiring individual
independent contractors, temporary office workers and freelancers.
How outsourcing works
For a company to effectively outsource responsibilities, it is important to focus on the business
partnership as much the logistics. Outsourcing is about managing relationship more than service-level
agreements, and is a partnership, not a purchasing project. Maintaining and securing a trusted relationship
is essential in outsourcing efforts an