Monday, June 25, 2007

Outsourcing

Outsourcing is not a term of Science but rather a term of art. Depending upon one's perspective, outsourcing may be described as allowing an external organization to control important parts of one's business or paying another to do the work that a company no longer wishes to do in-house. Outsourcing is essentially a long term relationship between a customer & a supplier. An essential feature of outsourcing is that the supplier takes the responsibility for delivering the specific range of services to the client on a contractual or permanent basis. The External Service provider that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers. Outsourcing is a way for an organization to increase its effective capacity without investing capital in facilities, machines, recruitment & training. It may also be thought of a way to enhance the organization’s competitive edge in the areas of cost, time, quality & flexibility by selecting a partner who specialize in a particular service & by developing long lasting relationship with selected suppliers.

Companies follow outsourcing model to carry out various functions, such as payroll, billing and data entry. Those processes could be done more efficiently and therefore more cost-effectively, by other companies with specialized tools and possess trained personnel.

In today’s Technological world, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes. But some organizations outsource whole operations. The most common forms are Software Development outsourcing and Business Process Outsourcing (BPO).

BPO encompasses call center outsourcing, human resources outsourcing etc. These deals involve multi-year contracts that can run into millions of dollars. In today’s global marketplace outsourcing has made itself accessible to many organizations on a national and international level. Software Development outsourcing can be classified as a service which allows an organization to get a third party external vendor to develop custom software application for their use.