Quick Answer: What Is The Process Of Outsourcing?

What is BPO?

Business Process Outsourcing, or BPO, refers to the process of contracting standard business functions to be handled by a party outside of the company..

How do you determine outsourcing?

Here are 4 steps to help you determine your outsourcing cost using the differential cost concept;Define the business function you want to outsource. … Calculate your in-house costs that could be avoided by outsourcing. … Calculate your total costs of outsourcing.More items…•

What is Outsourcing in simple words?

Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure.

Is outsourcing a good idea?

It improves efficiency, cuts costs, speeds up product development, and allows companies to focus on their “ core competencies”. To many people, outsourcing is a frightening proposition.

What are the pros and cons of outsourcing?

The Pros and Cons of OutsourcingOutsourcing vs. … Pro 1: Outsourcing can increase company profits. … Pro 2: Outsourcing can increase economic efficiency. … Pro 3: Outsourcing can distribute jobs from developed countries to developing countries. … Pro 4: Outsourcing can strengthen international ties. … Con 1: U.S. job loss. … Con 2: Lack of transparency.More items…•

What are the criteria for outsourcing decisions?

Six Key Factors in the Right Outsourcing DecisionControl of core competency. Don’t outsource your core competency. … Intellectual property content. Some country cultures have little appreciation for software as intellectual property. … Technology level. … Cost factors. … Product or services. … Creative or operational.

What is an example of outsourcing?

Some common outsourcing activities include: human resource management, facilities management, supply chain management, accounting, customer support and service, marketing, computer aided design, research, design, content writing, engineering, diagnostic services, and legal documentation.”

Which is best example of outsourcing?

Examples of companies that outsourceAlibaba.WhatsApp.Basecamp.Google.TransferWise.Skype.Slack.

What is the benefit of outsourcing?

Advantages of outsourcing For example, some of the recognised benefits of outsourcing include: improved focus on core business activities – outsourcing can free up your business to focus on its strengths, allowing your staff to concentrate on their main tasks and on the future strategy.

Is outsourcing good or bad?

It helps the global economy. … Basically, outsourcing is helping the US economy bounce back from the recession. A study from Harvard University have seen that “outsourcing likely to be beneficial to the United States as a whole” and “in the long run, outsourcing is likely to be a good thing for the U.S. economy”.

When should you consider outsourcing?

The top five things to consider when outsourcingCost-efficiency. Put simply, the majority of outsourcing takes place to increase profit margins, lowering expenditure on labour and operational costs, while improving the bottom line. … Business reputation. … Innovation. … Communication & collaboration. … Calculated risk. … Time to reap the rewards.