Outsourcing is the contracting of a company’s specific function or functions to another or other companies for the purpose of efficiency or fast delivery of services. Most a times, the function been outsourced to another organisation is considered non-core function of the contracting company.
Though outsourcing has been in operation as long as the work environment existed, recently, companies embrace the outsourcing model more to carry out narrow functions, like billing, order processing, data entry etc. These processes are considered to be done more effectively, efficiently and less costly by contractors who may be considered to have more specialised personnel, tools and facilities.
Outsourcing takes many forms; organizations still hire service providers to handle a single business process but some organizations outsource whole operations. The most common forms of operations where organisations outsourced wholly are information technology and business process outsourcing. Business process outsourcing includes human resources, finance/accounting, as well as claims processing outsourcing. These outsourcing relationship involve multi-year contracts. Most frequently, the people performing the work internally for the client organisations are transferred into the workforce of the service provider.
Even though this has enhanced the process of globalisation and dysfunctional transactions organisations are striving for, organisations should consider whether they should go for a short-term or long-term relationship in their bid to outsource.
More organisations are outsourcing many of the tasks that are necessary to their business and thus giving them more time to work on development and expansion. This is a process that requires time for stability. Therefore, organisations going into outsourcing should seek long-term relationship than short-term as it would give them more time to focus on the key developmental issues and expansion programmes. There are several advantages to outsourcing; when an organisation outsource, it essentially create more time for itself to concentrate more on its present strategy as can be seen in the case of telecommunication companies operating the country.
The telecommunication companies offering mobile (data, voice and video) services in the Nigerian business environment their bid to provide quality services as well as capture the highest market share in the outsource the production of recharge cards to other companies to handle. Rather than involved into the production of recharge cards, these companies concentrated on gaining more market share than having divided attention. The ideal has paid off as these companies are competing favourably with revenue running into millions of dollars on a monthly basis.
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