What Is Outsourcing?

Multiracial industrial engineers working at automated AI robotic production factory - New tech

Adopted as a formal business strategy in the 1980´s, outsourcing is the process of hiring third parties (often employment agencies) to conduct one, or a variety, of services within an Organization that were typically performed by the Organization itself. Often, outsourcing is used so that a company can focus on its core operations. It is also used to increase efficiency and cut costs on labour, among other reasons.

The essential difference between temporary agency work and outsourcing, is that the former involves nothing more than the assignment, secondment, or in other words, the leasing or hiring out of workers. The Organization to which the workers are assigned or leased out is responsible for the direction, supervision, control and management of these workers, while in the latter (Outsourcing) the employment agency not only provides the manpower/labour, but is also responsible for directing, controlling, supervising the workers and accountable for achieving or failing to achieve whatever objectives were agreed to the with the Client Organization – a very big difference!

Examples of Outsourcing

Consider a bank that outsources its customer service operations. Here, all customer-facing Enquiries relating to its online banking service would be handled by a third party (e.g. an employment agency) and the workers it chose to hire. The bank determined, for a number of reasons, that by outsourcing its customer service operations it could better achieve its objectives.

Security services are a very common and visible example of outsourcing in practice. Supermarkets, banks, embassies, factories, universities, etc. that opt to outsource security could have inversely chosen to place the security personnel on their payroll and under their direction and supervision. As well as this, they could have managed the security related matters on their own (in-house), but decided instead, to outsource this service because they believed that, all factors considered, it presented the best solution

African american worker woman wear spectacles crossed arms holding clipboard standing.

Advantages of Outsourcing

  • Work Organizations can benefit from manpower located abroad without having to hire them, deal with any red tape, take on any managerial role or take responsibility for performance or business outcomes
  • Work Organizations can benefit from manpower located abroad that will only consider accepting a job in another country if the Social Security and other employment related benefits and contributions are directed to their home country accounts
  • Employers benefit from the possibility of holding the temporary work agency, to whom an activity has been outsourced, accountable for results
  • Possibility to define a clear budget and establish limits to expenses
  • No hassle or responsibilities, not only with payments and other Human Resource administrative procedures, but also with management and supervision
  • A solution for situations where manpower needs are more permanent in nature or for when it is not legal or feasible to contract staff on a temporary basis.

Have you decided that outsourcing is the ideal solution for your Organization?

In that case, do not hesitate to reach out to us.

We will carefully analyse the request.

If it is within our scope of competencies and we are able to mobilise the necessary resources, you can count on us to provide you with an excellent and reliable service.

Tags:

What do you think?

Related Insights