We are living in the world of rapidly growing technology. Outsourcing (OSC) is the gift of technology. It is the process of contracting the business to a third party. OSC became popular in 21st centaury in America. Through the past years OSC became most popular industry worldwide. It helps to focus the company in its core product reducing the cost of labour.
Manufacturing of any product is a complex process and requires experts at all stages. A particular firm may not have experts of all level, so they outsource their business to other firm, which has experts of the required level. The company, which has outsourced their business, becomes the client and the other company that provides the service becomes the supplier. The employees of the client becomes the employees of the supplier.
There are two types of OSC, Business Process Outsourcing (BPS) and Information Technology Outsourcing (ITO). Business Process Outsourcing involves call centre outsourcing, human resource outsourcing, and finance and accounting outsourcing. Some of the top IT companies involved in outsourcing are IBM, Accenture, Capegemmini, HP etc.
OSC helps the company to focus on its core product, example, Apple decided to focus on the R&D of its product and outsourced the manufacturing unit from China. OSC saves time, money, and utilizes human resource to the fullest. Many IT companies outsource jobs such as call centre services, email services , and payrolls, these services are handled with separate companies those specialized in each service, and are often located overseas.
OSC has its own disadvantages. Employess of lower grade becomes the employee of the suppliers, thus there's a communication gap between the employees and higher managerial level. Other most important disadvantage is leakage of the information. OSC is not safe from the security point of view. One such high-profile theft happened with the Citibank costumers. The call-centre employee acquired userid and passwords of the American Citibank costumers and transferred the fund to their accounts created under fictitious names . Citibank could not find the problem unless the American costumers complained about the theft.
OSC faces other problem such as laungage, time zone , and cultural difference, if the work is being done in offshore.
Thus, outsourcing is considered as the consolidation between different businesses from different fields, resulting in better overall product in terms of quality. But it has its own shortcomings which can be managed to overcome any challenges.
Manufacturing of any product is a complex process and requires experts at all stages. A particular firm may not have experts of all level, so they outsource their business to other firm, which has experts of the required level. The company, which has outsourced their business, becomes the client and the other company that provides the service becomes the supplier. The employees of the client becomes the employees of the supplier.
There are two types of OSC, Business Process Outsourcing (BPS) and Information Technology Outsourcing (ITO). Business Process Outsourcing involves call centre outsourcing, human resource outsourcing, and finance and accounting outsourcing. Some of the top IT companies involved in outsourcing are IBM, Accenture, Capegemmini, HP etc.
OSC helps the company to focus on its core product, example, Apple decided to focus on the R&D of its product and outsourced the manufacturing unit from China. OSC saves time, money, and utilizes human resource to the fullest. Many IT companies outsource jobs such as call centre services, email services , and payrolls, these services are handled with separate companies those specialized in each service, and are often located overseas.
OSC has its own disadvantages. Employess of lower grade becomes the employee of the suppliers, thus there's a communication gap between the employees and higher managerial level. Other most important disadvantage is leakage of the information. OSC is not safe from the security point of view. One such high-profile theft happened with the Citibank costumers. The call-centre employee acquired userid and passwords of the American Citibank costumers and transferred the fund to their accounts created under fictitious names . Citibank could not find the problem unless the American costumers complained about the theft.
OSC faces other problem such as laungage, time zone , and cultural difference, if the work is being done in offshore.
Thus, outsourcing is considered as the consolidation between different businesses from different fields, resulting in better overall product in terms of quality. But it has its own shortcomings which can be managed to overcome any challenges.