|
|
What is Outsourcing?
Home » Small Business » Small Business Outsourcing » What is Outsourcing?The definition of the term has continued to grow over the past decade, but in general it’s a word used to indicate a relationship between a business and a service provider. Outsourcing normally occurs when a business decides that it can improve its bottom line and efficiency by giving a third-party service provider responsibility for certain processes within the business. As opposed to a contract for the completion of a specific project, outsourcing contracts provide for the continued maintenance of that process by the service provider for the length of the contract. The outsourcing industry grew considerably in the 1990’s, but often revolved principally around service providers who specialized in information technology. The array of service providers has widened considerably since that time, however, and companies now outsource processes as distinct as customer service and market research.
Traditional outsourcing closely tracks the definition above. For example, Company X has possessed an in-house telemarketing department for several years, but has now determined that it can save money by outsourcing its telemarketing needs. Normally, the former telemarketing employees of company X will be laid off or reassigned within the company, or, more likely, hired by the service provider. The service provider will then perform the telemarketing process under guidelines established by company X.
Greenfield outsourcing is different from traditional outsourcing in that it involves the outsourcing of a function or process that the company has not previously performed. If, to continue our example, company X lacked a telemarketing department, and engaged a service provider to perform that function, company X would be using greenfield outsourcing. In that case the service provider still operates under guidelines established by the business, but there is no employee dislocation.
Related Small Business Outsourcing Articles
- What is Outsourcing?
- How can Outsourcing benefit my business?
- What are the risks/disadvantages of Outsourcing?
- Should I use Outsourcing in my business?
- How should I choose an Outsourcing provider?