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:

• Client
  The company that decides to have an external party perform one or more of its business processes.
• Provider
  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 in 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, we can identify 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 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:

• Inshoring/Onshoring
  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.
• Nearshoring
  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.
• Offshoring
  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.