Sunday, July 1, 2012

Outsourcing in a nutshell

What is Outsourcing?

Outsourcing is basically hiring people or availing services that is outside of your own and the end product or service can still be named under your own.

Wait, what?

See it this way, you are a hotel that does laundry to your guests' clothes and even your own bed sheets and stuff like that. Yet, somehow the loading capacity of your own laundry facility can no longer hold the pending laundry jobs. So you, as the hotel or hotel manager, will go out and search for available laundry shops that can facilitate the laundry jobs that your own laundry facility can't. In that simple illustration, you see that with the emerging day to day cleanliness standards and guests laundry cleaning jobs, you can not have the other laundry tasks go to pending status. You need to find other facilities or services that can deliver the growing demands of your hotel business. So, that is what we call Outsourcing.

Why would some businesses do that?

In most cases, these businesses need not to hire a full-time employee to do small tasks. Hiring one would require them to pay the medical fees, insurances, and other benefits offered to a regular full-time employee. In which case, it could mean that they are paying this personnel more than they actually get from them. Example for this is hiring a computer technician. Computer technicians can work mainly on computer hardware repairs, but if there are no damaged computers in the company, all they do mainly in their free time is just sit around and probably play some games on their desktop. Most businesses are trying to avoid these instances so what they do is that they only hire these people when they need it, like for computer repairs, maintenance, configurations, installations.

But maintenance means regularly or at least monthly, right?

Yes, exactly! As I have mentioned earlier this applies to businesses that does not need a full-time employee. Some business have their own in-house computer experts but in general goods and services type of businesses especially the small enterprises these are the ones that does and would most-likely get, if they are lucky enough, a break-even on their investment with computer systems and the full-time computer expert. But also, there are medium to large scale businesses who are cutting off expenses to save more for their operations and this is where they Outsource such services.

So, does outsourcing have to be from my country to the other poorer countries?

Of course not! As you have read from the above two basic examples of services, these can be done in same country. It is more like a business-to-business transaction.

But I can get services to the other poorer countries right?

Of course you can! There are great opportunities in getting services or products from those countries! For one, it is cheaper and you could probably cut at least 1/8th to 1/16th of what you pay to your local contracts. Second, the quality is great! Not to mention the quantity of their output too! You could send these countries a job order for during the morning and as you sleep in your home, these people are working hard to perfect your job order and the next morning you get what you paid for! That is the power of Outsourcing!

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