Types of Outsourcing

Believe it or not, there are actually a number of different types of outsourcing out there. I'm going to go over three primary types with you today and inform you of what they are and how they work.

Technology services outsourcing is the first type I'll talk about today. Technological innovations are quickly enticing businesses and economic models to evolve. Companies have to adapt to those changes to thrive in a competitive market. Some of these technologies include electronic commerce, network infrastructures, applications, telecommunications, and website development. In-house employees may perform such functions but not as good or as quick as getting a third-party firm that specializes on the field and are more cost-effective.

The second type is business process outsourcing (BPO). This involves operational functionas like customer relations management, equipment, accounting, human resources (HR), logistics, procurement, security, documentations, insurance, health care, manufacturing, and media outsourcing. Specific tasks can be outsourced to a third-party firm, especially those outside the core competency of a company. This type of outsourcing can even be divided into two parts: front office tasks and back office tasks. Front office tasks are usually related to customer-oriented matters like marketing, customer service, and technical support. Back office usually deals with internal work like billing, payroll, and purchasing. These, and other operations, can be outsourced by enterprises that include multimedia, bookkeeping, consultancy, data entry, proof-reading and editing, and even medical transcription.

Knowledge process outsourcing (KPO) is the last type I'll discuss today. This one involves advanced research, analytical, and technical skills, which means that providers are expected to work independently. In this type, specialists are given managerial control. Examples of this type of outsourcing include pharmaceutical research and development, intellectual property research, content writing, and database development services. It usually involves short-term and peripheral projects.

Among the three types, BPO is considered the most popular, especially if you consider that most companies outsource business processes to offshore locations, like India.

But figure out what type of outsourcing works best for your company and what you need out of the process. Whichever works for you, go for it. Look into it and see what you need to do to do that type of outsourcing.