Outsourcing definitions abound, but most of these definitions carry the same essence. Similarly, consulting a dictionary for the definition of outsourcing would almost always yield a definition describing outsourcing as an act, of an established company, of availing the services of another firm to handle critical and non-critical business tasks. However, a more sophisticated definition of outsourcing would add another clause – that the outsourced company be an expert of the required services by the outsourcing company. Simply put, outsourcing is the corporate method of delegating processes, services, and transactions to a third party firm. In turn, these processes are done by the third party firm on behalf of the outsourcing client. Meaning, the third party firm represents the client in carrying out these business processes.
The definition of outsourcing and this is in partial consideration of the people involved in the outsourcing industry, can be stated as such: Outsourcing is a type of contracting whereby the outsourcing client provides the specifications and requirements of the business process to be outsourced. Although the outsourced firm complies with the requirements of its client, the management of the operations and its people is done independently by the outsourced firm. Hence, there is no ownership of the outsourced firm by the outsourcing company, nor is there a direct employer and employee relationship between the outsourcing company and the employees of the outsourced firm.
Given the definition of outsourcing, one is compelled or more appropriately, led to think how this innovative business solution started. Outsourcing goes way back thousands of years ago with the manufacture and trade of various goods. With the formation of small communities and the emergence of a trading society, people with specialized skills began to exchange their respective services for goods such as foods and tools. From woodworking and blacksmithing, people would barter their products or sell them for other products of equivalent value. This ancient form of outsourcing also evolved along with the advancement of society – evolving into the modern factories where the raw materials are sourced from a supplier to be manufactured by a different company. But, far from being a need to fill a lack, modern-day outsourcing is driven by other reasons: cost savings, highly skilled manpower, increased productivity, and opportunity to allocate time and effort to more important aspects of the business.
If at all the current definition of outsourcing and modern outsourcing practices are to be considered, there is one common thread among them – dynamism. From freelancers specializing in various skills like writing, customer service, and decorating, outsourcing also crossed over to other disciplines like finance. Accounting and computation of taxes are done by a freelance accountant, lawyers are hired to defend for a client, and there are advertising agencies to market products and services. However, the definition of outsourcing also evolved on a much larger scale. Companies solely dedicated to performing commonly outsourced business tasks have emerged, giving a new dimension to the outsourcing processes. The dynamism of its definition and its processes make outsourcing the way of life for modern businesses.
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