What are the benefits of outsourcing programs
Outsourcing: When it makes sense to hand over tasks
Definition: what does outsourcing mean?
The term outsourcing is made up of the terms “outside” in German, “resource”, ie source and “using”, in German to use. In the case of outsourcing, an external service provider is engaged to take on certain tasks. This can be the case, for example, if you cannot do the tasks in your own company well. Maybe because you don't have the experience or because it doesn't pay off in terms of effort. Thus, with outsourcing, you get an external service provider into the company who takes on tasks and thus relieves the company of work. Typical areas that are often outsourced are customer support or accounting.
What is online outsourcing?
There is also the possibility of submitting tasks for an online business. These tasks include, in particular, the outsourcing of marketing services or IT tasks that can be performed via the Internet. Examples of this are SEO optimization, programming jobs or multimedia productions. Online outsourcing is particularly interesting for small and medium-sized companies that are not yet as well positioned financially.
Why should you use outsourcing?
Outsourcing involves a lot of work in advance. After all, you first have to find a suitable service provider, negotiate the contracts with him, and in the end you still have to check the quality of the work yourself. Nevertheless, in many areas it is worthwhile to hand over the work to other companies. Often the effort that would have to be put in to acquire the skills of the tasks or to get the necessary equipment is out of proportion to the effort of getting an external service provider on board. And even if many companies decide to take on all the tasks themselves, it is not infrequently the case that the quality suffers. It is often the case that it is cheaper and of better quality to get support from outside.
What types of outsourcing are there?
Outsourcing can vary depending on the area and tasks and can be combined differently. The following forms are among the most common when it comes to outsourcing.
While outsourcing is often about very large tasks and areas of responsibility that are handed over to external service providers, outtasking is more about specific subtasks that are handed over. So you don't hand over an entire project that you would like to have done outside of the company, but only part of a large project for which you may not have the capacity.
With out-servicing you outsource all tasks that have to do with contact with the customer. That would be the case, for example, with customer support, call centers or advice centers. This also falls into the area of so-called managed services, which take care of the maintenance of information and communication technology.
If you have to completely restructure a department in the company, the areas of responsibility of this department stand still for a while. To prevent this from happening, the departments can be temporarily handed over to external service providers. In this way, losses during the restructuring period can be avoided.
Application service providing
This term refers to the so-called application service providers who provide software services for companies. These software mostly run via an external data center. This means that companies can use the software without having to install it on each individual computer.
Business process outsourcing
Business process outsourcing means that entire business processes are transferred to a service provider. This can be the case, for example, in the areas of finance, recruiting or logistics. These are service operators and not service providers, as is the case with other types of outsourcing.
Business transformation outsourcing
This form is mainly used when new business models are introduced. In that case, the service provider supports the company by taking on the tasks and also helps the company with management consultancy. The aim is to transform and optimize the company.
With offshoring, certain areas of responsibility of a company are transferred abroad. On the one hand, this has the advantage that the competition takes place internationally and thus leads to even greater reach for the company. In addition, in many cases one can benefit from lower production costs and lower wages for highly qualified personnel.
With complete outsourcing, complete areas of responsibility are outsourced. The difference to higher-level outsourcing is that the personnel of the outsourced area is often also outsourced. This is often the case in the EDP or IT area, for example.
The advantages and disadvantages
Outsourcing various tasks has many advantages but also disadvantages. Especially when a company is still at the beginning, it should think about giving up tasks because it is often impossible as a small company to cope with all tasks. But what are the advantages and disadvantages?
- Cost reduction: Service providers can often use other economies of scale
- Risk minimization: Young companies are more affected by economic fluctuations. Outsourcing allows you to act more flexibly with your workforce.
- Time savings: It can take a long time to read into a new area. You get around this with outsourcing.
- Higher quality: Service providers who specialize in one area usually deliver a higher quality than companies who try to do it themselves.
- Free resources: By outsourcing tasks, the company can devote its resources to the main tasks in order to further develop the business.
- Addiction: Outsourcing creates dependencies on the service provider. You have to rely on them to do their jobs on time and in good quality.
- Binding contract: By concluding contracts with service providers, you are bound to them for a certain period of time. So you can't change providers spontaneously.
- privacy: Those who hand over tasks to service providers also hand over part of their data protection. You have to rely on the service providers to handle this data carefully.
- Elaborate communication: The communication channels with external providers are significantly longer than internally. This can lead to time delays.
- Employees are not promoted: If you only hand in tasks and do not confront employees with them, you run the risk that they will not develop any further. But if that is exactly what they want, you run the risk of changing companies.
Mistakes to Avoid
When it comes to outsourcing, a lot of mistakes can occur, so that not everything always necessarily goes according to plan. It is therefore better to avoid the biggest mistakes directly.
1. Wrong provider
If you want to outsource a task, you often have a choice of many different providers. It's not that easy to choose one. So be very thorough in your selection and compare many offers from different providers in order to find the best one for you.
2. Don't just outsource everything
Once you have got the taste for giving up uncomfortable tasks, you are often tempted to do it again. Take another look at the advantages and disadvantages and carefully weigh the costs and benefits of outsourcing. For many tasks, it does not necessarily have to be worthwhile to hand them in.
3. Unclear agreements
Both internally and externally, you should make sure that all tasks are clearly distributed. So if you intend to hand over an area of responsibility, you should make precise arrangements with both your employees and the service providers. It must be clear to everyone what exactly falls within their area of responsibility and what does not.
Outsourcing can be very valuable for many companies, especially for startups. You hand over tasks in which you have no expertise, which saves time and money. However, it does not always have to be an advantage to hand everything over to external service providers. In many cases, you should think twice about bringing external companies on board or not doing the tasks internally. So you should carefully weigh up the advantages and disadvantages in order to then find the best solution for your own company.
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