Just What Exactly Is Outsourcing?

Outsourcing has become a bit of a buzzword lately, and plays a large role in the global economy. But what does it actually mean, how does it work and should you do it?


What Is Outsourcing?

Outsourcing means to either obtain goods from an outside supplier or to contract work out, in place of an internal supplier or service provider.

Outsourcing is by no means a new concept. Businesses have been outsourcing since at least the Industrial Revolution, looking to increase their market share and growth. In modern times, outsourcing has been recognised as a business strategy since the late eighties.


Reasons For Outsourcing

The reasons companies delegate tasks and responsibilities to third parties vary, depending on the company’s purpose, vision and function.

Some of the main reasons for outsourcing include: reducing costs, improving quality, fostering innovation, increasing speed to market and focusing on core business strategies.


Types Of Outsourcing

Outsourcing comes in many shapes and sizes. It may be as simple as designating a proofreading task to a freelancer down the road. Or it may happen on a much larger scale, like relocating an entire business function to another state.

There are also different subcategories of outsourcing as well, such as offshoring, insourcing, nearshoring, homesourcing and co-sourcing.


Should I Outsource?

Deciding if and when to outsource very much depends on the current situation of your company. Cost saving measures and improving finances are usually a driving factor when looking to outsource.

However, businesses also need to look at which processes can be handled effectively by an external organisation. Consider the professional, manufacturing, operational procedures and process-specific areas of your business.


What impact has outsourcing had on your business? We’d love you hear from you!