Outsourcing is an age-old concept. The trading companies during the early part of the Nineteenth century practiced the process. They used to outsource their non-core functions to some external companies, which were specialized in service, manufacturing ancillaries or components, or carrying forward certain functions for any product or service.
What does outsourcing refer to?
Basically, it is the process of being sourced by an external firm. A third-party vendor is hired to perform the non-core activities of a firm. The outsourced activities range from providing IT services to handling customer care. Some common examples include telemarketing services, answering services, order taking services etc.
Types of outsourcing:
Outsourcing is broadly classified into business process outsourcing, or the BPO, and knowledge process outsourcing, popularly known as KPO.
Business Process Outsourcing:
The concept of BPO was first introduced in the mid 1990s after the rage of the internet and major technological innovation in the field of communication. The business activities of the parent company are delegated to some BPO firms. This is mostly done to cut costs and to let the parent company to focus on its core-competency area. The services offered by a BPO include IT help desk services, accounting services, human resource services, customer support services, telemarketing, database management, web development, content writing, market research etc.
Knowledge Process Outsourcing:
KPO is the outsourcing of technological services. This is a high-end value added service, which rests on factors like skill and domain knowledge. A KPO involves the work of business process outsourcing, analysis process outsourcing (APO) and research process outsourcing (RPO). A few of the key roles performed by a KPO include animation and simulation, intellectual property research, data analytics and medical solutions among a lot others.
The Key Benefits of Outsourcing:
Some of the advantages of hiring a BPO or KPO are,
.Lets you focus on your core business operations
. Lets you focus on your core business operations
. Helps to cut the costs of HR management
. Provides access to specialized resources
. Performs key tasks like project management, risk management and service delivery
. Manages demand and supports operational activities
. Improves customer satisfaction, facilitating customer loyalty and retention
. Takes full advantage of difference in time zones
The outsourcing industry is one of the fastest growing industries in today's world. It is perceived to be a necessity as far as business processes are concerned. More than the benefit of availing lower wage rates in a developing country, outsourcing is seen as strategic management tool of considerable significance. Outsourcing is expected to grow at a constant rate as the industries resorting to business process outsourcing grow rapidly over time.
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