What is outsourcing: services of local companies

Many are wondering what is outsourcing. The term has many definitions. A literal translation from English means that it is drawing resources from outside to meet the necessary needs. In practice, this definition is used when placing long-term orders to obtain the required services from third parties, or passing some production functions to other firms.

There is some closeness, and in some cases, compatibility of outsourcing and subcontracting. The first activity is based on long-term stable business relations between the contractor and the customer, which are based on contractual agreements. In the interests of the customer, the contractor adapts its production and technological facilities or intellectual and technical potential, receiving payment for this, which is determined not by a share in profits, but by the existing cost of services. Knowing what outsourcing is, you can see that subcontracting is in fact a special case of this type of activity, implying limited connections within one-time orders.

The whole outsourcing market can be divided into two segments: the provision of intellectual services and industrial outsourcing. To the first kind it is possible to carry IT-outsourcing. This work on maintenance of office equipment, information processing, programming, etc. Industrial outsourcing on the one hand involves the production of various components, hardware, blanks, and on the other hand, the implementation of auxiliary operations and functions to ensure production (storage, accounting, maintenance, repair, advertising, cleaning of premises, etc.) Logistic outsourcing.

One of the factors that contribute to the development of these services is the availability of a highly efficient modern communication environment (transport, computerization and communication). This ensures a reliable and rapid exchange of information, material and financial flows, together with a high level of specialization of enterprises in the sphere of services and production.

The most important argument in favor of the development of outsourcing is saving money, as well as guaranteeing the high quality and reliability of the services provided. This is due to the fact that the contractor usually has a narrow specialization and focuses the best specialists, uses the most advanced equipment, applies advanced technologies, accumulates service experience, working with various clients.

Knowing what outsourcing is, many companies turn to such organizations. After all, this kind of specialist, serving many customers, optimizes the economy of services and distributes their overhead costs, and this allows you to reduce prices for services and simultaneously improve their quality. Given this, customers buy services, while not bear the costs associated with the content of complex equipment and specialized qualified personnel.

Turning to the contractor and knowing what is outsourcing, the customer company can cut development costs, because it becomes possible to purchase services at the best prices without incurring additional costs. Having concluded the contract of outsourcing, the customer has the right to receive the necessary services, performed at a professional high level, ensuring for himself the guarantees of the contractor's material liability for the quality of performance. This is possible, because the outsourcing firm is a legal entity and has certain assets that can be claimed for damages compensation. In addition, this activity is insured, and the outsourcer shares his responsibility with the insurance company.