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What is Business Outsourcing?

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  • Written By: Felicia Dye
  • Edited By: Heather Bailey
  • Last Modified Date: 05 December 2016
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Outsourcing is an arrangement that alleviates a party of its duties or responsibilities. This is done by getting another party to assume those tasks. Business outsourcing, also known as business process outsourcing (BPO), refers to this type of arrangement when it involves one business handing over its administrative duties to another business or professional.

The types of tasks contracted out in a business outsourcing arrangement can vary. They can include accounting, human resources, and customer service. These arrangements can be a benefit in a number of ways.

One of the benefits of customer outsourcing is that hiring businesses that specialize in this type of work can be more efficient for a company than when it attempts to complete all of those tasks themselves. For example, a company’s accountant is not likely to double as a customer service agent. This means that two positions must be filled. If one of these employees is for some reason unable to perform, the other is generally not qualified to fill in.

Employing numerous people to complete specialized tasks can be expensive and complicated in some countries. The expense is derived from the office space necessary to house them, the salaries necessary to pay them, and the benefits they receive. The complications are often derived from the marketing and training necessary to get the best people to do the best job and the regulations necessary to lawfully maintain their employment thereafter.

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Business outsourcing can also be a solution when skills are limited. In some areas, specialized business skills may not be available to everyone who needs them. To handle this situation, individuals in need may seek others to assume certain responsibilities.

The instances in which business outsourcing involves international partners grew substantially during the first decade of the 21st century. One of the primary reasons for this is because using foreign labor often translates into even greater savings. This type of business association is made possible in large part by the resources available on the Internet and the ability to use the Internet as a quick and effective communication tool.

Technology has also made it possible for business outsourcing to be done from a location of choice. Many people employed to complete the tasks that have been outsourced by companies work from home and Internet cafes. This can be a benefit for those individuals and for the companies that hire them because they also no longer need to maintain office space.

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sunshine31
Post 4

Comfyshoes- I had a friend that worked with Arise.

The client companies save money because they only are only charged by the call, so if the phone does not ring they are not charged.

In a typical call center, the company would be paying a straight wage regardless if the phone rings or not.

In addition, they do not have to maintain the costs of running a call center, and they can flex their schedule up or down depending on their business needs.

This allows companies to have the ultimate flexibility and have full coverage of the schedule which does not always happen with brick and mortar employees. These are huge advantages for business process outsourcing management.

comfyshoes
Post 3

Sneakers41-I know that sometimes a company will outsource its entire call center in order to save money.

Sometimes they also move their call center to another developing country, or some even use American business outsourcing companies that hire independent contractors that work from home in order to take incoming calls from their client’s customers.

Companies like VIP Desk, Arise, Live Ops, and Working Solutions are a handful of companies that provide business outsourcing services to Fortune 500 companies looking for business outsourcing solutions.

sneakers41
Post 2

Suntan12-I know that business IT outsourcing is also a department that companies tend to seek employees from either from staffing firms or from other countries.

IT business outsourcing India is very common. India being a third world country does have a large amount of talented programmers.

In fact, there were a lot of firms looking to recruit IT professionals from India for the Y2K conversion.

Many companies were offering sponsorships which was in the form of an H1 Visa.

Since in this case there were very talented programmers that would work for a fraction of what the Americans would work for, many American firms sponsored these employees in order to get them to be able to work in the United States.

suntan12
Post 1

Business process outsource is the procedure of a business performing outsourcing functions. Many businesses in order to reduce costs, outsource business segments that could be performed elsewhere with considerably less costs.

For example, a company might outsource an entire department within the company and move it to a developing country in which the labor costs are a fraction of what the labor costs are in the United States.

For example, a friend of mine worked as an accountant for a company that moved their entire accounting operation to Costa Rica. In Costa Rica, an accountant earns about $20,000 a year while in the United States most accountants earn $60,000 to $100,000 a year or more.

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