Advantages of Outsourcing in Meliorating the Business Model

Author: CodyWatson | Posted: 13.02.2012

Outsourcing is one of the smartest and effective ways to improve the business model of a corporate. A multitude of companies from different sectors have increasingly indulged in outsourcing. First, let us begin by knowing, what is outsourcing? It is simply the process in which two companies (local and foreign) companies partner together to execute the projects of the outsourcing client. However, outsourcing can also be done through a third party, commonly called service providers. And the party is also referred to as ‘Third party’. The third party is one that works for another party. This is very common in the field of call centre. Although the process of outsourcing has been done for several years, it is becoming increasingly popular for a variety of reasons. The business model of outsourcing includes various processes such as payroll, data entry, and billing.

The most important types of outsourcing are Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO). The former involves software projects while the latter deals with distribution of projects to the call centre. BPO deals with call centre outsourcing that includes Human Resource (HR), finance and accounting, and claims. Generally, outsourcing projects are handed out for several million dollars and are signed on a multi-year contract basis. Generally speaking, outsourcing involves the participation of two entities. All the deals and transactions of projects and funds take place only between the two. As far as the corporate are concerned, the process of outsourcing not only enables them get more business but also sell their brand value across the globe.

Advantages of Outsourcing

The main advantage of outsourcing is that it can be executed at lower costs and with better efficiency. These days, the local resources are in high demand and the labor-cost is also more whereas if the project is outsourced to other countries it saves a lot of money for the company. For example, people in the Asian countries charge very less (lesser labor costs mainly based on their currency and economy).

Moreover, these days, people in the Asian countries are so skilled and experts in their own field which makes them generate the work with better quality. The difference in the time zone is yet another advantage of outsourcing. If any high-priority, immediate assignment comes up the outsourcing companies can send the work in the night before they hit the sack and can expect the work to be completed by the time they see sunrise! Obviously, it is daytime in the Asian countries when it is night in countries like US and UK. So, outsourcing companies get round-the-clock support to get their jobs done which saves a lot of fuss. However, the companies needs to be thankful to the leading Broadband Providers for providing first-rate services and making it easier to exchange information through the Internet at lightning speeds.

Outsourcing also helps to enhance the productivity and efficiency by a large extent. As there are myriad direct and third party bpo’s, the choice for the right client becomes very easy. It also enables the outsourcing companies to expand their business and get new and better projects in the future. In case of call centre, outsourcing gives the main advantage of providing 24*7 customer/technical support to the customers. So, outsourcing also helps to improve customer service and cater to the needs of the millions of consumers in whichever time is convenient for them.

Outsourcing can be done more effectively by adopting certain strategies. For example, if a payroll is an issue for the outsourcing company, it would be good to find an expert payroll service provider and have tie-ups with them. This will get rid of the risk involved in carrying out the process.

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