A Definition of Outsourcing
Outsourcing is all around us and has always been. It just has become more apparent in today’s difficult economic times.
Unfortunately, outsourcing today is mostly associated with “Offshore Outsourcing”; meaning sending a certainfunction, business process or job to an oversea third party service provider, who has the ability to perform the same for less money.
We have to get away from this mindset that OutSourcing is equal to sending work overseas. Think about it, outsourcing has always been a part of our daily lives; as well in business as at home.
Some examples of business outsourcing are:
- Hiring of cleaning crews to clean offices
- Having trucking companies or the post office deliver your products and your mail … and YES this is outsourcing in its most basic form
- Hire external service companies to maintain office equipment, like copiers, faxes, computers, etc.
Some examples for outsourcing in everybody’s private life:
- Hiring a student to tutor your children
- Hiring a cleaning person to clean your home (occasionally)
- Taking a bus or train to work … and yes this is outsourcing, since you give somebody else the responsibility to get you from point A to point B and you don’t drive yourself.
- Visiting a doctor… again, this is outsourcing. Who can afford to have their own doctor or nurse on staff?
- The list goes on …
- … and also here the list could go on and on.
Anybody may come up with their own examples about what they do not do themselves anymore in their daily life. Next, I want you to think about why you “Outsource” this functions or tasks and I bet that in 99.9% the answer is either money or lack of experience.
The same is valid for businesses. Outsourcing today is done because it just makes sense. Rather then investing in resources and additional education to do something that is not really a part of the core business function does not make sense anymore. It is cheaper and more effective to hire somebody who specializes in this area and has the skills, knowledge and the tools to perform the same function often even better and for less money or to say the least at the same cost to you.
Outsourcing does not make sense if one pays more for a service than if it would be performed inhouse. There for any outsourcing initiative must be evaluated carefully and a cost benefit analysis must be performed at all times
Again, Outsourcing does not mean a function is send overseas. There is onshore outsourcing, meaning outsourcing is performed by an entity in a neighboring or close by country or domestic outsourcing, which means the function is performed by somebody local or at least the same country.
Oliver Schmid has extensive experience in offshore outsourcing to the Philippines, onshore outsourcing to Canada and domestic Outsourcing of matrix oriented call centers. He is also versified in outsourcing of data center operations and data center monitoring and support. In addition Oliver Schmid participated in various 3PL and Supply Chainoutsourcing initiatives.