We explain what outsourcing is, the advantages and disadvantages of this process. Also, some examples and what offshoring is.
What is outsourcing?
It is known as outsourcing (English neologism: out“out” and source“source”), or as subcontracting, outsourcing or outsourcing, to the business process in which the fulfillment of certain tasks or internal services is transferred to another organization which would otherwise be more costly (in time or money) for you to take on.
The contracts of outsourcing They are generally assumed by subcontracting service companies specialized in the most favorable areas for it: generally those that require hyper-specialized knowledge or a series of tools and resources that the contracting company does not have or does not wish to have. For example, the areas of IT, human resources, asset management or accounting, technical support, engineering, etc.
Of course: the outsourced area cannot be central or nuclear in the business of the contracting company, and is usually based on contracts or regular tenders, held for a specific period of time. Not always when the services of an external company are contracted, one can speak of oursourcing.
This practice It is increasingly common in the business world given the high level of diversification of organizational needs, and the enormous inequalities between the economic regions of a globalized world. Thus, in many cases outsourcing represents a cost reduction that few companies can afford to reject.
Advantages of outsourcing
Some of the advantages of outsourcing are the following:
- Cost reduction. Especially when it is subcontracted to a small company or one belonging to a poorer economy (exploitation). This affects greater profitability of the company.
- Greater effectiveness. Since specialists are subcontracted in the specific area and issue that needs to be addressed, which frees the company from training costs and times, purchasing materials, etc. He outsourcing yields results much faster.
- Greater specialization. Since the subcontracted work is carried out according to the client's needs, evaluating the conditions of each specific case.
- Lower risks Since it is enough to change the external service provider to change the strategy or the way in which the work is executed, instead of reformulating an entire area and having to incur layoffs, changes or incorporations.
Disadvantages of outsourcing
Some of the disadvantages of outsourcing are:
- Discredit. In the case of the exploitation of underdeveloped economies to carry out expensive work at a much cheaper price, paying figures well below what is ethically considerable. Outsourcing always incurs these risks.
- Lack of worker loyalty. Since subcontracted employees do not receive their payment directly from the contracting company, but from the subcontracted company, they do not necessarily feel part of the project on which they work.
- Worsening of working conditions. Since outsourcing is cheaper and more efficient, many companies choose not to grow or incorporate new staff on a permanent basis (and with all their legal benefits), but rather to hire a outsourcing to do the job in a given time.
- Loss of control. Since you must fully trust the subcontracted company. If it is from another cultural region, for example, problems of understanding may arise.
- Lack of exclusivity. On the part of the subcontracted company, which can turn into episodes of fraud, industrial espionage, etc.
Examples of outsourcing
Examples of this practice are the order of the day. Many companies outsource services Community Manager (CM) to manage their social networks, since their communications employees cannot dedicate the entire day to managing their Facebook and Twitter accounts, for example. This has created a large field of work made up essentially of young people.
The market of outsourcing It is so varied and rich that large companies such as Accenture, IBM, Sodexo, Hewlett Packard, Genpact and many others dedicate, apart from running their own business, a good amount of their efforts and time to outsourcing services for other large companies. and medium-sized companies in various areas.
Outsourcing vs. offshoring
The term eitherffshoring (from English: off“out” and shore“coast, border”) or relocation, as it is called in Spanish, is often used to distinguish certain cases of outsourcing in which it is subcontracted to a company from another country or another region of the world.
The creation of this term is intended to distinguish the most problematic cases of subcontracting (whether for ethical reasons or for specific risks that have to do with immigration: lack of effective communication, geopolitical risk, etc.) from outsourcing daily, since the latter occurs within the borders of the same country.
