Done By Sigourney Wright
What is Outsource/ Outsourcing?
Outsourcing is the act of one company contracting with
another company to provide services that might otherwise be
done by in-house employees.
Often times tasks which are outsourced can be performed by
by the company itself.
Types Of Outsourcing
B.P.O (Business Process Outsourcing) : A particular process
or task is outsourced. E.g. Payroll, B.P.O work can be office
related or customer oriented such as answering calls or
K.P.O (Knowledge Process Outsourcing) : This calls for higher
involvement of the worker, the worker has to employ
advanced levels of research, analytical and technical skills
and have to make decisions of a higher order than B.P.O
Offshore Outsourcing : Literally means outsourcing your
activity to one who is not on your shore or beyond your shore.
Types Of Outsourcing Cont'd
I.T.O (Information Technology Outsourcing) :This is the
buying of Information Technology products or services
that could be furnished in-house, from one or a variety of
sources on the Internet.
Manufacturing Outsourcing: This involves the physical
moving/ transportation of the products from one place to
another. The common manufacturing outsource process
involves manufacturers outsourcing different processes from
developed countries where the manufacturer is located in
This picture shows
how companies in
the USA seeking
countries outside of
their country such
as China, India etc.
Reasons Why Companies Choose
If A Company is looking to expand, Outsourcing is a cost-
effective way to start building foundations in other
Outsourcing allows companies to focus on other business
issues while having other details taken care of by outside
Outsourcing allows companies to reduce their turn around
times (Time it takes to get a job done and deliver the
output), by taking advantage of the time difference between
countries. Thus, allowing firms to reduce time to market new
products and improvements, beating rivals who do not use
Reasons Why Companies Choose
Saving Labor Costs are perhaps the one of the most
important reasons why companies opt to outsource some of
their activities. The cost of labor in some developed
countries is extremely expensive thus, creating a large
expenses for employers. If the same jobs were done by
persons of the same qualifications at a far lower price then it
would definitely be advantageous.
Firms around the world are desperately trying to make use if
their in house talent pool. Expertise and experience are in
short supply, but in high demand and are quite expensive .
Outsourcing helps dissolve the dilemma and frees large pool
of in house resources for other work.
Disadvantages Of Outsourcing
Loss Of management control of business functions meaning
that you may no longer be able to control operations and
deliverables of activities that you outsource.
Problems with quality can arise if outsourcing provider does
not have proper processes and or he/ she is inexperienced in
working in an outsourcing relationship.
Not understanding the culture of the outsourcing provider
and the location where you outsource may lead to poor
communication and lower productivity.
Disadvantages of Outsourcing
There is a risk of losing sensitive data and the loss of
confidentiality. Therefore it is important to have a place to
avoid data loss.
If important functions are to be outsourced, an organization
is mightily dependent on their outsourcing provider. Risks
such as bankruptcy (A legal proceeding by which a person or
company is unable to repay outstanding debts.), and financial
loss cannot be controlled.
Effects Of Outsourcing On:
A company is: Lowers costs in labor to achieve a greater
The Country of the outsource provider : economic growth and
the creation of of new industries in areas which have lacked
The Country of the company's Origin : There are negative
effects not hiring of local employees which can contribute to
the country's unemployment rate, the closing of factories in
home country to expand or move to less developed country.
This is called "Shipping Jobs Overseas."
In Some cases the company might choose to expand its
operations to the less-developed country rather than expand
in its home country.
The End !!!!!!