Outsourcing has different dimensions. On one hand, it could mean obtaining talent, skills or information not present within the company. It could also be defined as reallocating the management and operation of a business activity to a different service provider. Some also define outsourcing as subcontracting non-revenue operations to consultants and professionals. Note that all the descriptions seem to involve a movement of services from one group to another, which is what outsourcing basically is.
There are different kinds of assistance and tasks that can be outsourced. Some of the more popular ones are Information Technology (IT) Outsourcing and Human Resource (HR) Outsourcing. Another kind would be Application Outsourcing. Each of these provides a number of advantages to the client organization, however, there can also be certain drawbacks.
Application Management involves the support, preservation and development of existing services. When a company has activities that provide no revenue, or has problems with regards to productivity or the quality, predictability and responsiveness of a service, enterprises turn to Application Outsourcing. Application Outsourcing is actually one of the first types of outsourcing.
A number of issues may arise from this, though. An example will be who handles the documentation, the service provider or the client? What about the operation procedures? How should they be addressed? How should a company’s processes be dealt with? Who will get the rights to the warranties?
Information Technology Outsourcing
Information Technology deals with the utilization of electronic devices for the processing of data. Its scope now involves, though it should already have been obvious, technology, and computing. Those involved in IT may have skills in data manipulation, networking, as well as in software designing.
Database and administration of systems are often included too. Information Technology Outsourcing is employed when a company has a lack in the ability to do IT functions. Also, IT is quite costly. Today, data is becoming more and more intricate and elaborate that handling it has become quite expensive. This is where outsourcing comes in. Outsourcing seems to be the solution for cheaper, yet quality service.
The issues for this kind of service have a wide scope. It could involve setbacks in software, equipment, and even people. A problem would certainly arise from lack in benchmarking, as well as when expected costs are not clearly defined, initially.
Human Resource Outsourcing
Human resources used to be exclusively synonymous to the word ‘labor’, which is one of the four factors of production. The term has now evolved to mean something quite different to businesses and corporations. It now refers to the group of people or department who sees to the screening, hiring, training, firing personnel. In Human Resource Outsourcing, the agency examines, employs and then prepares workers for another enterprise.
Like the preceding services, a number of complications arise from such a setup. For example, the issue of whether the service provider will have allotted space within the company it lends its assistance to. The limits to what the department can do might also be unclear, and cultural differences may be present.
Outsourcing seems to be a very good and advantageous move for businesses, however, unless reviewed thoroughly, and terms set specifically, a number of problems may arise and what is supposed to make things lighter could do a 360 and become a burden.