Types of Outsourcing

Organizations can realize significant cost-savings by outsourcing their manufacturing to countries where the cost of raw materials and labor isn't as high as in their home country.
Types of Outsourcing

Outsourcing offers a way for businesses to keep up with demand while reducing labor expenses. Not all outsourcing is the same, though, and it’s important to know the differences. Here are five types of outsourcing to consider for your organization.  

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Business Process Outsourcing 

Business process outsourcing, or BPO, is perhaps the most common type of outsourcing. In this situation, your organization will hire a third-party company to handle some of the processes at your business.  

The idea of BPO is to have an outside company handle some of the repetitive functions at your business. The most common examples of this are administration and customer support. BPOs can be either technical or non-technical in nature.  

When your organization takes advantage of BPO, you can increase focus on the essential functions of your company. Instead of having to spread your organization thin to handle customer support or IT functions, for example, you can focus on increasing brand awareness, developing new products and services, and creating new marketing and outreach plans. The flexibility you gain with BPO will also be supported by the money you can save by having a third-party handle some of your functions. 

Manufacturing Outsourcing 

Companies that manufacture and design products for sale often will utilize manufacturing outsourcing to cut down on costs. In the United States, manufacturing can be quite expensive. Not only is the cost of materials relatively high, but so is the cost of hiring people to run and work at the manufacturing plants. 

Organizations can realize significant cost-savings by outsourcing their manufacturing to countries where the cost of raw materials and labor isn’t as high as in their home country. The significantly cheaper cost of production can far outweigh the increased cost to ship the goods around the world. 

In this instance, your organization won’t lose control of the design and oversight process. You’ll just have people in another country handle the physical manufacturing of the products you created. 

IT Outsourcing 

IT is one of the most important functions of any organization today, but it’s often not an internal strength of the workforce. Every company today needs a strong technological background in order to function properly. However, hiring internal employees to manage your company’s IT needs can be expensive and complex. Third-party providers can cater IT services to your organization’s specific needs, allowing you to reduce costs by only paying for what you need. 

That’s why many organizations today are opting for IT outsourcing. There are tremendous benefits that can be realized by outsourcing IT services. It’s not just that you can save money, either. You can also significantly increase your company’s data security and technological functions. 

Professional Outsourcing 

Many companies have great ideas, but they may not have the technical capabilities to get things done. This is where professional outsourcing comes into play. 

Let’s say your company specializes in designing new services that are delivered to consumers through mobile apps. Your organization has thought through all the specifics for how the service will be delivered and what the app will look like. The only challenge is you don’t have employees on your team who can create the app itself. 

In this example, you can use professional outsourcing to hire software and app developers to create the app you’ve designed. This type of outsourcing can offer major cost savings compared to staffing an in-house team. Outsourcing can also be project specific, allowing you to hire third-party developers on an as-needed basis. 

Multi-Sourcing 

Multi-sourcing brings together multiple third-party companies that will each fill a specific role in a large project to complete a common and final goal. Multi-sourcing is used most often by larger companies that have big needs, but that doesn’t mean that smaller companies can take advantage of it too.  

In this model, an organization contracts an outsourcing company that would then aggregate other external providers to handle various aspects of the business function. Your organization can benefit from diverse ideas at diverse companies without having to establish all these relationships on your own. If you have a complex problem with ongoing needs, multi-sourcing might be right for you.  

Expand Your Business with SERVIAP 

SERVIAP is a leading Professional Employer Organization (PEO) ready to help your business expand operations throughout the Western Hemisphere. PEO is a model of co-employment, where we assume total responsibility for your talent, allowing you to focus on the strategic activities of your organization. Contact us today to learn more about how you can expand your business in South America and Latin America. 

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