What Is Outsourcing?
Outsourcing represents the transfer of management and / or day-to-day execution of a business process to an external party. In any outsourcing agreement, there are at least two parties involved:
The client – a company that makes the decision to outsource a business process / task to an external party.
The provider – a company that executes the tasks on behalf of the client
This is the most basic form of an outsourcing agreement. In a larger and more complex outsourcing situation, there may be brokers involved between the client and the provider/s.
Outsourcing: Business Process
There are 3 main categories of business processes that can be outsourced:
- Information Technology Outsourcing
- Voice Outsourcing
- Non-Voice Outsourcing
Outsourcing: Geographical Distance
Again there are 3 types of categories:
- Inshoring / Onshoring: Both client and provider are located in the same country
- Nearshoring: Client and provider are in different countries, but at a relatively short distance from each other. For example, the US and Canada.
- Offshoring: Client and provider are in different countries at long distance. For example, US client outsourcing to a Philippines provider.