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Online outsourcing refers to the practice of hiring a third party contractor or subcontractor over the Internet to carry out business tasks that would otherwise have to be performed by an on-site employee. Outsourcing carries the benefit of cost savings for business owners, thereby allowing them to be more competitive in the marketplace. Critics of outsourcing believe that the practice often takes jobs away from local employees, particularly if a company outsources tasks to workers or companies in foreign nations. An individual job can be outsourced by a company, or an entire business process can be outsourced.
Companies often use online outsourcing to have a specific business process carried out. Examples of processes that can be outsourced include human resources, payroll and accounting. Rather than paying full time employees to carry out these tasks, a company will outsource the process and pay the third party company or individual to carry out the tasks when needed. Other times, a company may need a one-time task to be carried out. For example, a business may need a logo design. Rather than training an employee to design the logo, or hiring a new employee to do it, the company may outsource the task to an expert company that does logo design. Once the task is completed, the contract with the designer ends.
Online outsourcing is a method by which companies can increase profit margins, and sometimes keep more workers employed. Homeshoring, for example, is the process of hiring a third party contractor who works from home to carry out business processes. The employee is from the same country as the company hiring them, hence the name homeshoring. The employee can carry out tasks such as processing customer service calls, invoicing customers, proofreading and editing marketing copy, or other tasks. In turn, the company may pay the telecommuting employee a lower rate than a full-time on-site employee, and will often save on costs by not providing that employee with health insurance or other benefits. The employee often saves money by not having to commute to an office, and studies have shown that many workers are much more productive when working from home.
Many labor groups and other organizations are critical of online outsourcing. Some companies outsource technical jobs to foreign countries, which is viewed as taking jobs away from local workers. Companies are often able to pay technical employees a much lower wage than workers in their home country, and view this as a way to cut costs and increase profits. For example, many electronics engineering companies in the U.S. use online outsourcing to hire engineering companies in India; workers there are able to perform the same tasks for much lower salaries.