What is Outsourcing?
Definition of Outsourcing
Outsourcing is commonly defined as the transfer of the management and/or day-to-day execution of a business process to an external service provider. In any outsourcing agreement, there are at least two parties involved:
The company that decides to have an external party perform one or more of its business processes.
The company that manages and/or executes the business process on behalf of the client.
This is the simplest and most direct outsourcing agreement. In larger, more complex outsourcing constructions, there may be one or more brokers between the client and the provider. There may also be multiple providers taking on different parts of the project. Brokers generally act as middlemen whose services commonly specialize in finding the right providers on behalf of the client and taking over some of the operational management. MicroSourcing is an outsourcing solutions provider, not a broker.
Outsourcing based on Business Process
Looking at the different business processes being outsourced, there are three main categories:
- Information Technology Outsourcing (ITO)
Outsourcing the design, development, implementation, and management of IT products and processes to a third party provider.
- Voice Outsourcing
Outsourcing call center functions such as customer support and telemarketing to a third party provider.
- Non-voice Outsourcing
Business processes that do not fall under ITO or Voice Outsourcing. Examples are accounting, marketing, sales, research and development, and administrative tasks.
MicroSourcing specializes in a number of fields that mostly fall in the Information Technology Outsourcing (ITO) and Non-voice Outsourcing categories. For more information on these specializations, visit our Outsourcing Disciplines section.
Outsourcing based on Geographical Distance
Besides the type of business processes involved, we can also look at the geographical distance between the client and the provider:
Client and provider are in the same country. An example would be a company based in New York outsourcing to a company based in Boston.
Client and provider are in different countries but at a relatively short distance from each other: for instance, a US-based company outsourcing to a Mexico-based provider.
Client and provider are in different countries and at a considerable distance from each other. An example would be a US-based company outsourcing to an India-based provider.