What is outsourcing?
What is outsourcing?
The term outsourcing describes a business strategy in which individual services, sub-areas or business processes of a company are outsourced to suppliers and are no longer provided or taken over by the company itself. This targeted use of subcontractors often helps to reduce costs in the areas of production, development and services.
Why is outsourcing services important?
Benefits of outsourcing
One of the benefits of outsourcing services is that it improves the strategic market position of your own company. In this way, companies can concentrate on their core business through appropriate outsourcing measures, and achieve cost benefits in the process. It is precisely through the use of specialist service providers that cost savings and quality optimisation, for example in production, can be achieved.
Finally, outsourcing enables a company to react quickly and flexibly to changes – for example, when materials management planning needs to respond to fluctuations in capacity utilisation. However, this presupposes that a company has up-to-date logistics and production concepts, as external service providers are integrated into the value chain. The basis of modern outsourcing is therefore efficient resource planning, which begins within the company itself. It is implemented using an Enterprise Resource Planning (ERP) tool and also covers the areas of merchandise management , financial accounting and payroll accounting .one way. ERP software serves as the company’s organisational backbone on which successful outsourcing can be built.
What is the purpose of outsourcing?
Decisions to outsource services must be based on a profitability calculation to verify the benefit of an outsourcing project. Implementing such a calculation is complicated in practice, because not only the costs of services, but z. For example, the costs of carrying out a project must also be taken into account.
Outsourcing can make sense, for example, if a company needs to become more flexible and concentrate on its core business. Tasks that are costly or cannot be carried out effectively themselves are outsourced to specialist service providers. Even fast-growing companies often consider outsourcing to avoid the time-consuming development of their own processes.
When planning an outsourcing strategy, however, it is important that the company’s own key skills and technologies are not outsourced. Otherwise, the company runs the risk of becoming dependent on one of its service providers. This dependency can lead to economic or quality problems with a service provider also leading to costs in your own company. Other risks of outsourcing may be a potential loss of knowledge in your own company or a lack of data protection due to access to data by a service provider.
What does outsourcing mean for businesses?
The importance of outsourcing for businesses varies depending on whether the outsourcing is internal or external.
In the case of internal outsourcing, for example, tasks that were previously carried out in-house are transferred to a subsidiary. With external outsourcing, on the other hand, tasks are entrusted to an external company. If tasks are outsourced to an external company, there is a risk that employees may be made redundant for operational reasons. This can happen, for example, when entire production areas are relocated to low-wage countries. However, this scenario does not have to happen. Outsourcing services outside the company, but also within the company, can just as easily relieve employees if they are e.g. B. able to devote more time to their core tasks. In order to achieve such positive effects of outsourcing among employees,
One example of this is the introduction of ERP software that is supplied and maintained by an external company. With such ERP software, merchandise management, financial accounting or payroll accounting can be designed efficiently and automatically. ERP not only reduces company costs; employees also have to worry less about recurring routine work. This increases employee motivation, results become visible to employees and integrating new colleagues is easier thanks to ERP software.
However, the following applies to all outsourcing projects: The project must be communicated to employees fully and openly through timely change management to avoid rumours and maintain a good working atmosphere.
What is online service outsourcing?
The Internet version of outsourcing is called online outsourcing. This primarily involves the outsourcing of marketing services and IT tasks that are provided via the Internet. For example, search engine optimisation, web design and programming, multimedia production… Online outsourcing is particularly interesting for start-ups and small and medium-sized businesses with limited financial leeway.