Outsourcing involves shifting of business activities that were previously carried out within a firm, are now outsourced to an outside company which can do them more cost-effectively. This is a broad definition describing outsourcing as an end state, but also a process which incorporates ongoing contract management and often the transfer of staff and assets.
BPO companies that outsource their products and services, is just not a simple financial or purchasing decision, but more often a major strategic decision that can have implications for the entire organization. The outsourcing companies are more like business partners that provide services on behalf of the company. Outsourcing has always been an evolving topic of discussion. All business enterprise evolve, and therefore BPO companies are no exception.
Both public and private sector organizations face the decision of whether to ‘make or buy’
Outsourcing has a long history. More than two hundred years ago Adam Smith wrote: ‘the maxim of every prudent master is never to attempt to make at home what it will cost him more to make than to buy.’ Therefore, this resulted in the outsourcing of various products and services, and focus on the core competencies and all those services that were difficult to outsource.
Outsourcing has a longer history in the manufacturing sector. Manufacturers have managed the growing complexity of their products by outsourcing and sharing the work of making products with others. This enables each company in the production chain to specialize in part of a complicated task. Both public, as well as private sectors, outsource their parts of services in order to maintain the decorum that is required to focus on the very core of the business. This type of business activities shows the specialty of the outsourcing partners to treat a client’s non-core functions as their own core functions. Certain expert providers can also have clients’ core functions as their own core functions. Specialist service providers can deliver the following benefits to public and private sector clients:
Higher-quality service through investment in specialist skills and management expertise:
As the demand and competition in the market increases, the availability of resources such as expert judgment, skilled staff, and health and safety compliance decreases. A client can outsource the meeting of these requirements to a specialist. This is more cost-effective and can improve the overall product or service. As the experts know when and how to invest in these resources in order to get the abundant availability of the required resources.
Innovation is the successful exploitation of new ideas. This can take the form of new technologies, new products or new ways of working. Excellent BPO companies expert themselves are innovators and this investment supports the innovative activities of client organizations. These agents with their innovative skill understand the importance of their client’s satisfaction and ensure that maximum output is obtained from a minimum amount of expenditure.