Outsourcing is becoming a common development among specific industries and services˳ Outsourcing can be defined as subcontracting a service to a third party company to provide a service that could otherwise be performed by in-house workers˳ Simply put, outsourcing refers to a transfer of a business function or a service to an external, third party service provider˳
Many large scale and medium scale businesses are getting more and more involved in outsourcing as the years go by˳ An example of jobs being outsourced are call centers who run services such as technical support, credit cards, medical transcription, and even bill payments˳ These third party companies either handle different jobs or they do offer the same service but cater to a wide range of clients˳ Most of these jobs are situated overseas or off shore and are usually located in developing countries˳
Only recently has outsourcing been used for a lot of specialized services but outsourcing itself has been around for a long while˳ Specific specialized services like company payrolls, billing and data entry are outsourced in order to have these services done more efficiently˳ Specializing in a specific process does not only make the service more efficient, it also makes it more cost-effective˳ Lower operational costs and specialized services are some of the main reasons why foreign companies resort to outsourcing˳
Companies have a lot of reasons to outsource their services to other countries but one main reason why they do that is because they save a lot of time and money which is perhaps the most important aspect of it all˳ One of the reasons why companies want to outsource to developing countries is because the payroll and the benefits are not as expensive compared to the mother location˳
The minimum wage of an employee in the Philippines is nowhere near the minimum wage that an employee in the United States has to be paid˳ Benefits such as health care, bonuses, wages costs much lower if you outsource at developing countries than availing them at the business’ original location˳
Information technology outsourcing and business process outsourcing are perhaps the two most popular types out of the several forms of outsourcing˳ Outsourced information technology services often means the transfer of computer and internet related labor˳
On the other hand, business process outsourcing involves call center outsourcing, human resources outsourcing, investment and accounting outsourcing, and claims processing outsourcing˳ IBM and Accenture are just some of the biggest companies that are involved in business process outsourcing˳
Outsourcing also has its disadvantages like many other business models˳ One of the disadvantages is the severance of direct ties between the company and their client˳ Services like customer care is one of the highest priority in outsourced services nowadays˳ Another drawback of outsourcing is the loss of jobs in the developed nations because jobs and opportunities are disappearing abroad˳
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