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Types of Outsourcing

The document discusses outsourcing, which involves using external resources rather than internal resources to perform business functions. It defines outsourcing and explains that companies outsource to reduce costs and focus on their core competencies. There are two important considerations for outsourcing: 1) determining which functions to outsource, such as non-essential services, manufacturing, or specific business processes, and 2) deciding when outsourcing would be most beneficial for business growth. Common types of outsourcing include professional services, manufacturing, process-specific functions, and operational activities like maintenance.

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298 views2 pages

Types of Outsourcing

The document discusses outsourcing, which involves using external resources rather than internal resources to perform business functions. It defines outsourcing and explains that companies outsource to reduce costs and focus on their core competencies. There are two important considerations for outsourcing: 1) determining which functions to outsource, such as non-essential services, manufacturing, or specific business processes, and 2) deciding when outsourcing would be most beneficial for business growth. Common types of outsourcing include professional services, manufacturing, process-specific functions, and operational activities like maintenance.

Uploaded by

Queen Valle
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Outsourcing

Outsourcing is derived from the words outside and resourcing. It is a business practice
wherein you are to decide whether foreign resources are to be used in the benefit of
your company. A company often has its core procedure which is given a lot of attention.
When a company begins to expand its field of market, so does its need for manpower
and resources. However, as important as it may seem, getting enough manpower and
resources will not only consume time but also money. In these situations, a company
tends to resort to outsourcing to reduce the time and cost of looking for what it lacks.
There are two circumstances that needs to be carefully thought of before outsourcing.
 
[Link] what to outsource. Knowing what you need is very important when you
decide to outsource. Usually, companies only focus on one field of expertise and
sometimes forget the others. When this situation happens, a company often resorts to
outsourcing people. However, they should possess the proper qualifications for them to
be considered and the existence of different fields of expertise provide a greater chance
for the company to find the right person for the job.
It is not only people that can be outsourced. At times, companies also resort to
outsourcing some resources they use in their products. Also, it helps secure a stable
chain of supply for the materials needed which can help the company focus on the other
aspects of the business.
 
2. Know when to outsource. Knowing when to outsource is one of the challenges
faced by some companies. It needs careful planning and consideration whether
outsourcing now or later would be beneficial to the growth of the company.
 
Types of Outsourcing
Knowing when and what to outsource are keys in making a business more productive
as it allows wise utility of its resources, manpower, and expertise. Consider the following
specific types of outsourcing to better understand it.
[Link] Service Outsourcing. Companies often outsource some of the
complicated tasks and procedures. IT, accounting, legal, purchasing, and administrative
support are the most common outsourced services. 
2. Manufacturing Outsourcing. This type of outsourcing has been a trend for a while
now. Since making your own products is costly, it would be a good idea to do the
manufacturing in a place where labor costs less. This will save both money and
manpower.
3. Process-Specific Outsourcing. For the continuity of a company, normally it focuses
on its core procedures. With process-specific outsourcing, other necessary procedures
can be done by another company. Let’s take a book company as an example. Its core
procedure would involve writing, illustration, layouting, proofreading, editing, and mass-
producing the books. If a book company ties up with another company to take care of
the delivery of ordered books, process-specific outsourcing is done.
4. Operational Outsourcing. Operational outsourcing takes over the procedures
required for the best quality of a product from the company to a third party company.
Usually, maintenance and equipment repairs are those that are commonly outsourced.
In some products like smartphones, before a company releases it in the market, a
dedicated quality assurance team inside the company will have to test it and then the
company will hire a group to further test the quality of the smartphones.

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