Business owners aim to increase their product quality, want to lower their costs and definitely focus on competencies. But how are these possible if there are a lot of business fuctions to do? Outsourcing – that’s the answer – but what actually is outsourcing?
Outsourcing has been a popular term in the business and management world. According to Wikipedia, it was often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing and offshore outsourcing have been interchangeably used but according to Wikipedia, “outsourcing,” in corporate context, represents an organizational practice that involves the transfer of an organizational function to a third party. When this third party is located in another country the term “offshore outsourcing” makes more sense. It was also defined by WhatIs?.com as an arrangement in which one company provides services for another company that could also be or usually have been provided in-house.
Outsourcing, in a simpler explanation, is the act of letting another company do activities that your company cannot manage to prioritize. Basically, that company that will do the outsourcing job has more knowledge in handling it. According to Wikipedia, modern business theories suggest that most activities that are not part of a company’s core competency should be outsourced.
In the 1990s, it has been a popular term used and became more known. According to Wikipedia, this was primarily because of the growth in the number of high-tech companies that were often not large enough to be able to easily maintain large service companies of their own. In some cases these companies hired technical writers to simplify the usage instructions of their products, index the key points of information and contracted with temporary employment agencies to find, train and hire generally low-skilled workers to answer their telephone technical support and customer service calls. These agents generally worked in call centers where the information needed to assist the calling customer was indexed in a computer system. The agents were often not able to tell the customer they did not actually directly work for the original manufacturer. In some cases, the agents are not allowed to even give out their real name.
There have been a lot of criticisms raised about outsourcing. Like that of the loyalty of outsourced workers and their work ethics, the quality of outsourced services versus the in-house one, outsourcing being a threat to other jobs and work as well as the security of sensitive customer information.
However, outsourcing has its benefits that should be acknowledged. The fact that they aid in the increase in product quality, decreases the company’s costs, help the company to focus more on its competencies and basically hire more workers that could be a big help for those people in that way.
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