One of the good ways to increase the efficiency of the workflow and achieve greater returns from personnel is the principle of the division of labor. True, not all enterprises can afford to create a large staff of narrow-profile specialists, because their salaries are far from rather big. A great alternative is available to such organizations: they can delegate (delegate) to a representative of another organization some functions that are not of key importance. This delegation is the answer to the question of what is outsourcing. In simple words, the process can be described as engaging a specialist from the outside.
Outsourcing Features
An outsourcing company, which is taken to fulfill these responsibilities, concludes an agreement with the customer company. Long-term cooperation is of interest to both enterprises, as it is mutually beneficial.
There are full and partial outsourcing. What is it in simple words:
- Full - outsourcing company assumes the performance of all functions in any field.
- Partial - the employees involved should carry out only certain procedures or activities.
Despite the fact that this concept is relatively new for domestic businessmen, many have already managed to evaluate how convenient and economical outsourcing is. What it is? The types and examples can be cited as follows: hiring a company to fully service the computers of an enterprise is a complete outsourcing. At the same time, in case of partial transfer of responsibilities for repair or monitoring of the status of the software, other tasks remain with the full-time employee.
What is outsourcing: in simple words about the types of outsourcing
In the course of the activities of modern enterprises, the need may arise for the following types of outsourcing:
- Production consists in transferring to another organization the fulfillment of any production task. An example is most advertising agencies. They delegate printing of printing products to specialists (banners, flyers).
To save on the purchase of additional equipment and expand their capabilities, it is extremely important for such enterprises to know what outsourcing is. In simple words, this concept can be described as a reasonable economy.
- In the field of IT, this type of outsourcing involves the involvement of organizations to create websites, maintain equipment that is at the disposal of the customer company or to develop any type of software with its subsequent maintenance.
A good example is retail chain stores that do not have programmers on staff, and on a contractual basis attract an outsourcing company to create and maintain their sites.
- In the field of conducting business processes, if necessary, the regular implementation of small amounts of work with documents or with personnel, an appropriate outsourcing company is involved. What are these simple words? This is an accountant, economist or business coach, not included in the number of permanent employees of the enterprise. The hired specialists carry out work related to payroll, accounting, legal or consulting services, auditing, and staff recruitment.
Outsourcing Benefits
Among the advantages of such a phenomenon as outsourcing is the elementary ability of a company to concentrate its efforts on conducting core activities. That is, the enterprise can only engage in its own production without distraction for secondary tasks (for the implementation of which experts are invited).
Significant financial savings are also important. It is due to the fact that it is possible to reduce investment in resources and abandon the training and maintenance of unclaimed employees.
Thus, outsourcing becomes a significant factor in saving. What is it in simple words: as an invited specialist, work is done faster and better. Some enterprises report a 20% reduction in costs. In addition, new ways of strategic partnerships open up new opportunities for all participants.
Disadvantages of Outsourcing
One of the disadvantages of this type of activity is a certain dependent position in which the customer company falls. The occurrence of any difficult situation (economic or industrial) at a third-party service provider affects the work of their client.
In addition, there may be discontent from the permanent employees of the enterprise, who are forced to make management decisions to engage in outsourcing. What is it, the definition, meaning and features were discussed above, however, the human factor was not taken into account. Occasionally, incoming employees may be judged by competitors or job applicants.
Also, a significant disadvantage of outsourcing is the need for third parties to provide confidential information about the enterprise.
Outsourcing - Business
Having understood what outsourcing is (in simple words - delegation), we can consider some aspects of the organization and functioning of an outsourcing enterprise.
According to many owners of their own companies, this type of activity is quite profitable, profitable and promising. Moreover, the formation of such a company does not require such large sums of money as a traditional business.
Initial investments are required to pay for the rental of premises, paperwork, purchase of office equipment and equipment. The selection and maintenance of qualified personnel and the advertising of a newly formed company also become an important cost line. The traditional practice of doing business has been to attract invested funds. Entrepreneurs who do not have the required amount to form a company resort to this step.
Investors can be both private individuals and other enterprises or banking institutions.
Personnel - the main resource of an outsourcing enterprise
Based on the fact that an organization that “rents out” its employees receives remuneration for the work they perform, its personnel must be well trained, competent, competent and well versed in their field.
When searching for personnel, the following list of requirements is put forward to the applicants:
- Profile education.
- High level of competence and responsibility.
- Sufficient experience in related activities.
- Sociability.
What is outsourcing and outstaffing: differences in concepts and terminology
Such seemingly similar concepts really have much in common. However, in practice, these are different forms of labor organization and the main differences are listed below:
- In terms of labor, outsourcing is the hiring of an executor to perform a specific task from “A” to “Z”. Outstaffing is a short-term stay of a freelance employee at the disposal of a company. During this period, the new employee is engaged in the tasks assigned to him.
- For documenting outsourcing, a contract is concluded, while outstaffing is considered a classic employment.
- It is customary to outsource the fulfillment of many intellectual tasks related to the accounting or legal side of the business, and with outstaffing tasks can be of almost any nature.
- The difference also lies in wages: they are settled with the outsourcer when all the work is done, and for the employee during outstaffing there is a staffing table.
Conclusion
Thus, we can conclude that the new word and new concept serves many entrepreneurs in various fields of business. To increase the profitability of production, reduce the cost of maintaining staff and expand their own horizons, organizations use outsourcing of staff. What it is in simple words can be described in several synonyms: delegation, transfer of responsibilities, external involvement of specialists.