What is an outsourcing company in simple words? What is outsourcing? What are outsourcing services?

For domestic businessmen, outsourcing is a new concept, but despite this, many enterprises actively use this service. Transferring non-core activities to third-party specialists is much more expensive, but the work is performed at a high quality level. Such a business can generate good and stable income. In the previous publication we told you. You will learn how to open an outsourcing company in this article.

What is outsourcing?

Many people ask the question: What is an outsourcing company in simple words? Everyone knows that it is impossible to become a professional in all industries, so each organization has its own narrow area of ​​activity. In order to pay more attention to the development of the enterprise, many entrepreneurs shift additional, important functions to other companies that specialize in a certain field of activity. This useful mutual assistance is called outsourcing.

Previously, this service was used to calculate salaries for management at some enterprises. This made it possible to avoid publicity of information. Today, businessmen who are trying to optimize their expenses are happy to use the services of leasing personnel. Third-party specialists handle tax filings, visit banks, and even have access to some confidential information.

It is worth noting that in Western countries, personnel outsourcing is a fairly popular service. Some companies outsource almost 80% of non-essential functions. In our country, the outsourcing business is at the stage of development, but despite this, 30–40% of entrepreneurs are already actively using this service.

Types of services

Before drawing up a business plan for an outsourcing company, you must first decide on the type of its activity.

Among the most common services, the following should be highlighted:

1. Accountant services;
2. Tax reporting;
3. Advertising activity;
4. Employee management;
5. Office printing;
6. Cleaning;
7. Website creation and promotion.

Experts recommend choosing niches that have not yet been filled, which include:

• Development of corporate publications;
• Sales department management;
• Logistics services.

This list is unlimited by law. If an entrepreneur has found a highly specialized type of activity in his region that is in great demand, he can safely occupy this niche.

Registration of activities

Before opening a recruitment agency, you should legalize your business. If several co-founders will be involved in the business, an LLC should be opened. One owner can register an individual entrepreneur. This type of activity is not licensed, so you will not have to obtain any additional permits.

To build a business on staff rental you will need approximately 400 thousand rubles.

This amount includes the following expenses:

1. Office rent – ​​70 thousand rubles;
2. Purchase of furniture – 100 thousand rubles;
3. Business registration 10 thousand rubles;
4. Advertising – 20 thousand rubles;
5. Computer equipment – ​​100 thousand rubles;
6. Salary – 100 thousand rubles.

At the start, you will not make a solid profit. You must first establish yourself in the market and gain regular customers. If you use the right personnel selection methods and are able to prove yourself to be the best, within 2–3 years of operation the profitability of your business will reach 40%.

Staff

The success of your business largely depends on the choice of employees. Use advanced modern recruiting methods to select the best talent.

They are subject to the following requirements:

• Competence;
• Experience;
• Communication skills;
• Ability to communicate with clients.

Over time, as your business begins to flourish, you can hire a professional to handle employee selection. The responsibilities of the recruiting manager include interviewing the applicant, checking his professional qualities, and applying for a job.

At first, 5–10 people are enough for full-fledged work.

Basic methods of personnel selection

The main task that every new entrepreneur faces is finding employees. For this purpose, various methods of personnel selection and assessment are used. Let's look at some of them:

1. Advertisements in business newspapers and magazines;
2. State employment centers. This is one of the most common methods of personnel selection. The center offers employers several interesting programs. For example, a company can accept an employee for an internship, and after he is enrolled in a permanent job, the employment center pays him a salary for a year.
3. Recruitment agencies. Nowadays, the services of recruiting agencies are very popular. They charge 2-3 months of an employee's salary for their work. Some organizations work on a prepayment basis;
4. Advertisements in print media. By analyzing data in the media, you can find not only semi-skilled workers, but also employees for management positions. It is not practical to use such recruitment techniques to find highly qualified specialists, since they usually do not read such publications;
5. View resume. Specialists post their resumes on employment sites. If you decide to hire staff, you can use this information to select employees for your organization;
6. Advertisements on the Internet. To find specialists to work in an outsourcing company, you can post vacancy announcements on specialized websites on the Internet. To prevent competitors from finding out about your plans, you don’t have to disclose the company name. For feedback, just provide your email address. Such traditional methods of personnel search usually give good results;
7. Sending commercial proposals to various organizations;
8. Own internet site.

An important source of advertising can be your first clients who rented workers from your company and were satisfied with the level of service provided. Positive customer reviews will help create an impeccable reputation for you and, accordingly, increase the profitability of the enterprise.

The main task that new entrepreneurs face is to tell their potential clients about the benefits they can get by using their services.

Features of personnel management

Many businessmen outsource all accounting calculations and personnel document flow. This is quite labor-intensive work. Outsourcing organizations also offer motivational and appraisal projects, as well as human resource management for small businesses. Here they use a different approach to work, so this activity is considered a separate type of business.


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Before choosing an outsourcing company, you should decide what you want to get from such cooperation. If you want to get rid of routine and save your time, but leave all strategic aspects within the company, you should choose HR document management outsourcing. Another goal is staff training, competent independent assessment, and a motivation system. In this case, you should contact outsourcing companies that conduct seminars, trainings and other events.


Many business managers who do not know how to manage personnel spend too much time solving various organizational issues. If you entrust this matter to a professional, you can calmly deal with solving major problems and developing new business development strategies. Experienced entrepreneurs know what benefits can be obtained by transferring secondary functions of the company to third-party specialists, and therefore actively use such a service.

conclusions

In any business, there is no absolute guarantee that it will be profitable and profitable. If you correctly analyze your actions and take a responsible approach to your work, outsourcing your workforce can bring in good income. Competition in this area is low, so you can safely enter this business.

Do you want to save on wages, workplace equipment and other necessary costs associated with organizing the work of employees from 10 to 50%? This means that personnel outsourcing is the best option for you and your company. The essence of outsourcing is the transfer of some business tasks to third parties or private contractors. Delegating responsibilities and powers to an external source has its pros and cons, which you will learn about in our article. You will also receive important information on how to avoid the most common mistakes when choosing and working with an outsourcing company.

The meaning of the word outsourcing (in English “outsourcing”, where “out” is external, “source” is source) is the delegation by a company of certain processes and functions to another company (outsourcer, outsourcing organization). In simple words, outsourcing is the transfer of part of the work to the employees of another company specializing in these services. This is an opportunity to save a significant amount of money, which is why this type of cooperation is popular in Russia and all over the world.

When collaborating on the basis of outsourcing, the parties enter into an agreement describing the list and cost of work. Most often, individual entrepreneurs and companies transfer accounting, technical services, personnel selection, development and management of advertising campaigns, and production of printed materials to other organizations.

In what cases is it necessary to switch to outsourcing?

The performance of certain functions is transferred to a third party in cases where the company does not have the necessary specialist for such work or hiring such an employee would be too expensive for the company. If there is a need for some functions that need to be performed one-time or occasionally, then it is easier and cheaper to transfer them to a third-party contractor - an LLC, individual entrepreneur or individual.

Types of outsourcing

One of the advantages of outsourcing is the ability to transfer any (non-core or core) processes to an external contractor. Depending on the delegated tasks, there are several types of outsourcing.

Manufacturing (industrial)

Performing auxiliary functions and processes to ensure the production of finished goods, materials and equipment - accounting, warehousing, equipment maintenance, logistics, transportation. You can also transfer the entire production process to a third party (for example, if the company itself does not have time to fulfill urgent orders or is located in another country).

Outsourcing of accounting and tax accounting

The most popular type of processes transferred to specialized companies. Outsourcing of accounting services is suitable for individual entrepreneurs and companies with a small number of accounting documents and simplified taxation. It is much more profitable to turn to a third-party accountant than to hire a highly paid employee, buy special programs and equip a workplace. An outsourcer can perform the entire scope of work of a full-time accountant or only some of his functions (drawing and submitting reports, maintaining tax records, etc.).

Legal services

Also a popular type of outsourcing work. Only large companies and organizations can afford to hire a full-time, highly qualified lawyer. Small firms and entrepreneurs most often turn to specialized companies to order legal support or perform a certain process in the field of labor, tax, business law (drafting and checking employment and commercial contracts, resolving conflict situations with a contractor, buyer or supplier, etc.) .

IT outsourcing

IT outsourcing includes various works related to the setup, maintenance and repair of equipment, as well as the creation, implementation and maintenance of information systems or software at enterprises in various fields of activity. You can transfer to an outsourcer the entire range of work or individual processes (hosting, programming, technical support, testing, etc.).

Recruitment and personnel management

Transferring such functions to an outsourcing company is relevant for large enterprises with a large staff of workers and engineering staff. Specialized firms carry out all processes related to the selection and hiring of personnel, preparation of the necessary personnel documentation, calculation of wages and mandatory deductions, bonuses, vacation pay, and many others.

Outsourcing of labor protection

Every enterprise operating in the Russian market, regardless of the type of activity (production, trade, service sector), must ensure the safety of employees. These tasks (training and safety instructions, implementation of measures to prevent accidents) should be carried out by a qualified specialist or an entire department in this area. Many companies transfer labor safety functions to outsourcers, reducing the costs of such mandatory work.

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Transport (logistics)

For companies that need transport services from time to time, outsourcing their fleet will be beneficial. It will be much easier and cheaper to contact a logistics organization that carries out work on selecting a vehicle, route and transporting goods, raw materials, materials. If a company needs to constantly deliver its products, it is more economical to hire a full-time driver with a car or purchase a vehicle for transporting goods.

Outsourcing of foreign trade activities

For enterprises that export or import products abroad one-time or occasionally, it is more profitable to contact a third-party customs declarant or a specialized company. If import-export transactions are carried out on a regular basis (supply of imported raw materials or components for use in the production process, sale of finished products abroad, etc.), it is cheaper to hire a specialist in foreign economic activity on your staff.

Printing outsourcing

Such companies provide all services related to the production of printed products - design development and printing of forms, scanning and image processing for advertising layouts, risographic (for monochrome images), digital or offset printing (for full-color pictures).

Outsourcing of marketing and advertising

Marketing is one of the important areas of work for any company, determining an effective strategy for developing and promoting products to the market. In most cases, it is more profitable for small and medium-sized companies to contact a marketing company or advertising agency to delegate the functions of creating and promoting a brand, developing a marketing strategy, and conducting advertising campaigns.

Call center services

M Many companies turn to specialized contact centers for cold calling, informing customers about a new product or service, and other processes related to calls to a large database of recipients.

The company can outsource to the contractor all processes that are not core - accounting, legal issues, IT services, logistics and others.

Pros and cons of outsourcing

The point of collaborating with third-party providers is to focus as much as possible on core business processes, without diverting labor and other resources to perform auxiliary tasks. Transferring functions to an outsourcer has its advantages and disadvantages.

Advantages:

• saving money (on wages, insurance premiums and vacation pay, organizing workplaces);
• performing work at a higher professional level.
• the opportunity to concentrate resources on the company’s core processes, increasing its competitiveness and the quality of goods (works, services).

When the market situation and consumer preferences change, in most cases it will be much faster to find an appropriate contractor than to rebuild your own production facilities or introduce new technologies.

Flaws:

• the risk of losing confidential information, which will lead to a decrease in the competitiveness of the company;
• the possibility of receiving low quality services;
• reduction in the efficiency of obtaining information for managing the organization;
• imperfection of Russian legislation in matters of responsibility and obligations in the field of outsourcing.

Outsourcing too many functions can reduce the efficiency of some of the activities that have made the firm successful in the marketplace. Moreover, working with many outsourcers can lead to increased costs.

The cost of an outsourcing company’s services depends on the type, volume and complexity of the work performed, and the length of the contract. When compared in absolute numbers, the price of performing processes by an outsourcer is higher than by a full-time employee, but in reality there are significant savings. When concluding an agreement with a contractor, the customer chooses one of the types of payment: payment for results, payment by the hours specified in the contract, or payment for actual time worked.

Comparative table of costs for some services (outsourcer and in-house employee)

Services	Minimum service price	What determines the price of the service?	Monthly salary of a full-time specialist
Accounting and tax accounting	From 5,000 rub.	Organizational and legal form of the enterprise (individual entrepreneur, LLC, etc.), type of taxation, presence and number of employees, list of services	70,000 - 80,000 rubles
Legal services	From 20,000 rub. — subscriber services, from 5,000 rub. / per hour for individual services	List of services, time to complete work, availability of remuneration for results, need for a lawyer to visit	50,000 - 60,000 rubles
IT services	From 4,500 rub.	Number of units of equipment serviced, scale and complexity of the company’s IT infrastructure, frequency of software updates, list of services	80,000 - 110,000 rubles
transport and logistic	From 350 rub. / hour	Car make and class, vehicle rental with or without a driver, number of passengers, type of transportation (car rental for an event, transfer, etc.)	Driver - 40,000 - 50,000, the price of the car depends on the brand of the vehicle
Foreign trade services	From 35,000 rub. per batch of goods	Transaction amount, frequency of operations, list of necessary procedures	50,000 - 70,000 rubles
Recruitment	From 25,000 rub. (when selecting employees of the same type of profession), 7-12% of a specialist’s annual income, from 120 rubles / hour	Qualifications and number of selected employees, list of services for personnel records management and audit.	40,000 - 50,000 rubles

Mistakes when switching to outsourcing

Even simple outsourcing can be associated with a number of errors that will lead to financial costs.

Incorrect savings estimate

The main motive for outsourcing work to a third-party contractor is to reduce costs, but often the price is quite high or the quality of work is too low. To avoid this mistake, you need to analyze the TOP outsourcing companies to choose the optimal price-quality ratio.

Before outsourcing business processes to third-party contractors, you need to carefully calculate the profitability of each of them. Delegate to outsourcers only those jobs that are unprofitable to do yourself.

Wrong choice of contractor

When selecting an outsourcing company, you should pay attention to its reputation, reviews from regular clients, time on the market, the level of qualifications of the specialists who will perform the work, guarantees and other nuances. It is not recommended to choose new companies with too low prices for services - because... The work of a highly qualified specialist cannot be cheap.

Incorrectly drawn up contract or lack of outsourcing contract

The contract between the parties must spell out all the nuances - the result of the work, the deadline and time for completion, the cost of the service, the responsibility of the parties for failure to fulfill their obligations. Read the contract carefully and under no circumstances start working under a verbal agreement!

Every year, leading business publications and analytical firms compile ratings of the largest (by revenue) companies providing outsourcing services. When compiling the rating, indicators such as reliability, fulfillment of obligations, and reputation in the global and Russian markets are also taken into account. Most ratings are compiled in a specific area (outsourcing of IT services, accounting and tax accounting, personnel selection, etc.).

Company reputation

The business reputation of the outsourcing company is assessed in the form of a rating published by various specialized associations and business publications. You can find out the position of an outsourcing company on the online resources of the International Association of Outsourcing Professionals (IAOP). Some sites regularly publish information about employees “on demand” - the online magazine “Forbes”, “Expert.ONLINE”, “Business Expert”, the website HRpuls.ru, etc. The company’s reputation is also transmitted by word of mouth (moreover, negative experience transmitted several times faster and more extensively than positive).

Availability of reliable partners

When selecting an outsourcing company, you need to pay attention to the presence of regular large clients (companies usually indicate this information on their websites).

Duration of existence of the organization

The longer a company operates in a specialized market, the higher the likelihood that you will get exactly what you are promised for your money. Only newly opened firms may incorrectly assess the labor market and the level of wages, and have insufficient resources to complete the task.

Recently, narrowly specialized specialists have become much more highly valued, so many companies attract employees from external sources. The service of providing personnel outsourcing is very popular today - not everyone knows what it is and how outsourcers work. This service comes to the rescue when you need to save your company’s budget and effectively organize its work.

What is outsourcing

Translated from English, the term outsourcing means an external source. Outsourcing services involve the transfer of certain functions to specialists from another company. As a rule, this applies to non-core industries. External contractors under the contract provide catering, transportation services, advertising, cleaning, marketing, security, etc. An outsourcing company is engaged in personnel outstaffing - transferring personnel to other companies and enterprises. Recently, this industry has been actively developing due to the demand for contractor services.

The essence of outsourcing

Outsourcing work is based on the main principle - to keep for yourself what you can do better than others. External employees are given what they can do better than the customer’s company staff. The main purpose of transferring functions to subcontractors is to free up resources and concentrate all the enterprise’s efforts on competitive advantages.

Outsourcing services help the customer reduce the company’s costs for paying taxes, sick leave, vacations, contributions to pension funds and other things. In addition to reducing additional costs, the customer saves time on organizing the work of employees and forming a staff of workers. The main advantage of outsourcing is that it helps the customer concentrate on his own core production, without wasting time and money on additional activities. Subcontractors have more experience than full-time employees performing non-core functions.

The procedure for attracting an outsourcer involves the conclusion of an appropriate agreement. Each party is legally responsible for fulfilling its obligations. Depending on the chosen type of outsourcing, certain company functions related to information technology, personnel, accounting, and other things are transferred to subcontractors. Under a staff rental agreement, the customer must pay for services on time. The outsourcer's responsibility is to provide qualified employees.

Functions

The answer to the question, outsourcing - what is it, can be obtained by studying the functions that it provides. Any responsibilities can be assigned to third-party contractors, but the service does not apply to the selection of management personnel. Businesses turn to outsourcing firms to outsource the following responsibilities:

Outsourcing in Russia

The history of the introduction of outsourcing in Russia begins in the 90s. The first to appear in the country are security firms, marketing agencies and companies that control public relations. An aggravating factor in the development of outsourcing of any business in the Russian Federation was the low social security of employees. The main impetus for the development of the industry in the country was the desire to save on financial costs without sacrificing production efficiency.

At the moment, outsourcing business process optimization is popular in the Russian Federation, but there are many stereotypes associated with this concept. It is important to understand that outsourcing is not only about hiring staff, but also about organizing full-fledged cooperation in a specific area. By attracting third-party workers, it is easier for customer enterprises to conquer the market and increase production capacity.

Many large companies in the country have already appreciated the benefits of outsourcing. Particularly popular are the services of advertising agencies, website development and promotion, accounting services, and personnel selection. The advantage of long-term contracts with outsourcing companies is the opportunity to annually increase cost savings and the amount of financial resources for core development.

Types of outsourcing

To effectively conduct business, a company can delegate non-core functions to a contractor. In practice, enterprises use different services, of which there are a huge number today. You need to choose an outsourcing company taking into account the requirements of your company. Below are the main types of outsourcing that are developing in Russia and other countries.

Industrial

High-tech industrial enterprises often transfer functions of processing, assembly, and testing of products to contractors. The entire process is outsourced to telecommunications companies. Production outsourcing helps reduce the cost of manufacturing goods, increase the level of reliability and quality. The transfer of some responsibilities allows you to focus on the development of new products, sales and promotion of existing ones.

IT outsourcing

This industry is one of the most popular and includes a wide range of functions that are related to the maintenance of computer equipment and software. IT outsourcing – what are these services? They can be attributed to equipment maintenance and program development. The popularity of information technology around the world makes this type of industry one of the most in demand.

Knowledge management outsourcing

This species is just beginning to develop in the United States, so some countries are unfamiliar with it. The service involves managing company processes that require in-depth study and serious analytical processing. Outsourcing firms take on the creation of a knowledge base and management. Information in the future can be used to make important management decisions.

Accounting

This industry helps reduce the costs of an enterprise for organizing its own accounting department. Various functions within this industry are transferred to contractors. Accounting outsourcing – what is this service? One of the most popular forms of industry practice is to outsource accounting and reporting responsibilities to a third party. It is important to consider that the management of the customer’s enterprise is responsible for the result (responsibility is not transferred under a subcontract agreement along with responsibilities).

There are several options for cooperation:

• Accounting;
• making report;
• tax accounting;
• full service (daily accounting, reporting for time periods, creation and maintenance of primary documentation).

Personnel outsourcing

At large enterprises, where the possibility of staff turnover is not excluded, this type of service is in demand. Personnel outsourcing – what does it mean? Such services are provided by recruitment agencies, which helps the enterprise to significantly reduce the cost and time spent on staff management. Specialists from outsourcing companies can take on the responsibility of hiring employees and calculating the tax burden regarding salaries, bonuses, and compensations. It is important to note that the recruitment agency is not responsible for the quality of work of hired personnel.

Legal

Medium and small companies actively use the services of legal outsourcing firms. Contractors provide services on labor and tax law. In addition, you can attract outsourcers to properly carry out the reorganization, registration or liquidation of a legal entity. As a rule, in-house lawyers are much more expensive than the services of contractors due to the low workload on a specialist.

Logistic

Transport outsourcing involves transferring transportation or delivery functions to third parties. This is convenient for businesses that need to periodically send cargo over certain distances, but do not need their own transport department. Recently, the logistics outsourcing market has been actively developing. Contractors may perform warehousing and transportation duties.

Outsourcing company

For some business representatives, the question of what an outsourcing company is remains unclear. An outsourcer is a highly specialized or broad-spectrum company that provides personnel to other enterprises on the basis of a temporary cooperation agreement. The tasks of such contractors are to create a company asset, which includes qualified employees of various specialties, full-time and reserve.

What does he do?

Depending on the profile of the outsourcer, he can offer potential clients the following types of services:

• accounting;
• legal advice;
• advertising;
• insurance activities;
• preparation of tax reports;
• cleaning;
• office printing;
• website promotion.

Outsourcing agreement

All relations between the customer and the outsourcer are governed by the relevant agreement. The subject of the transaction is the provision of personnel meeting certain qualification requirements. The essential terms of the outsourcing agreement are presented below:

• subject of the agreement;
• the number of employees involved, their qualifications;
• the amount of work to be performed;
• cost of contractor services;
• procedure for payment for services;
• rights and obligations of the parties;
• duration of the agreement;
• procedure for accepting services.

It is important to take into account that the legislation of the Russian Federation does not in any way regulate the issue of providing outsourcing services, which is a disadvantage of working with third-party organizations, and therefore the agreement becomes the only source of control over the fulfillment of the terms of the transaction. It is important to reflect in it options for resolving all possible issues and controversial issues. It is necessary to describe in detail the list of services provided. The agreement is signed by the parties who have the right to do so. In some cases, it is worth checking whether the outsourcing company has a license to provide services.

How to open an outsourcing company

Before opening an outsourcing company, it is worth considering all the risks and finding your niche in the market. Owners can register as legal entities or entrepreneurs. It is important to immediately indicate the main activities of the company. You can choose any field, the main thing is that it is in demand in your region. An outsourcing company definitely needs start-up capital to rent premises, organize staff work, etc.

When organizing such a business, special attention should be paid to the staff: the agency’s performance, reputation, and productivity directly depend on the level of employee training. Hired employees must have appropriate qualifications and experience. Having chosen a certain direction of the company’s activity, it is important for management to navigate the basic requirements for personnel or use the services of a qualified personnel officer.

Outsourcing examples

In practice, outsourcing relationships can often be found. For example, many manufacturers and retailers cooperate with call centers so as not to organize them on their territory. Recruitment agencies are also in great demand, especially in large cities. Specific examples of using the service are presented below:

1. Ford produces only 1/3 of its products independently, the rest is outsourced to subcontractors.
2. Another giant that has managed to evaluate all the advantages and disadvantages of outsourcing and actively uses this work scheme is the IKEA company. It has virtually no production of its own, collaborating with thousands of suppliers. Transport functions at IKEA are delegated to a third party, so the company directs all its resources to retail sales of products.
3. Back in the 90s, Kodak transferred all IT areas to IBM, which aimed at leadership in this segment and received this opportunity.

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Outsourcing (from the English outsourcing: (outer-source-using) use of an external source and/or resource) is the transfer by an organization, on the basis of a contract, of certain types or functions of production business activity to another company operating in the desired area.

This is the definition of outsourcing as Wikipedia offers it to us. Nowadays you can find a lot of different definitions of the term “outsourcing” on the Internet.

In simple words, outsourcing is borrowing resources from outside. Outsourcing is now quite a common phenomenon and many companies and organizations actively use it.

The use of outsourcing is justified by the fact that every company needs all areas of its activities to be serviced with the highest possible quality. However, not every company can afford to keep highly specialized specialists on permanent staff, since their work is usually paid quite highly. Therefore, it is much more profitable to cooperate on the basis of a contract with various organizations that will perform a certain range of tasks required by your company.

History of outsourcing

If we talk about Russia, the first outsourcing companies here were security companies. With their help, many organizations were able to reliably protect their business without spending large amounts of money on maintaining security guards as permanent employees. Then marketing appeared in the “world” of Russian outsourcing and began to develop rapidly. This is due to the fact that there are not so many truly professional marketers, so it is more profitable to seek help from a specialized company than to find and employ a highly paid specialist.

When the Internet “boom” occurred in Russia at the end of the 1990s, outsourcing companies began to actively appear, providing hosting, as well as work on promoting and improving websites.

Already in 1997, more than 50% of manufacturing organizations outsourced one or more of their business processes (according to the American Management Association).

Types of outsourcing

Outsourcing is conventionally divided into the following types:
1. Production (industrial) outsourcing. This type of outsourcing involves transferring certain production tasks to outside companies. For example, advertising companies outsource the printing of advertising booklets, that is, the outsourcer here is a printing house. A good example of the use of production outsourcing is demonstrated by IKEA, which has absolutely no production facilities in its arsenal, while remaining one of the most highly profitable organizations.

2. IT outsourcing. This is the delegation of responsibilities for performing those tasks related to programming, equipment maintenance, software development, hosting support and other things.

3. Business process outsourcing. This is a type of outsourcing that involves transferring to an outsourcer to perform a business process. Most often, responsibilities for advertising, marketing, logistics, and accounting are delegated. Only those business processes that are not core for the company are outsourced.

4. Outsourcing knowledge management. This is the youngest type of outsourcing, and so far it is found only in the USA. Knowledge management outsourcing is associated with those activities that involve in-depth analysis and specific processing of processes that significantly influence management decision-making.

Benefits of outsourcing

1) by outsourcing certain non-core activities, the company can pay more attention to the core business functions that generate the most income;

2) outsourcing eliminates problems with finding and training personnel, since specialists are provided by the outsourcer itself; Possible problems with unexpected dismissal of employees, provision of sick leave, vacations, etc. are also eliminated;

3) increases the flexibility of the enterprise in case of a crisis situation in the market;

4) the company gets the opportunity to use high quality services or equipment;

5) the need to search for and purchase equipment or components is eliminated, since this is the concern of the outsourcer.

Disadvantages of outsourcing

It would be more correct to talk not about the shortcomings, but about the risks of outsourcing. The following situations may not occur, but every company using outsourcing needs to consider the possible risks.

1) being too “carried away” by outsourcing, a company can transfer too many areas of its activity to third parties, thereby depriving itself of many opportunities;

2) the company may face a lack of effective management;

3) there is a risk associated with taxes;

4) the risk of losing confidential internal information.

How global companies use outsourcing

About 60% of all companies that outsourced part of their activities initially did so for cost reasons. But many leading companies in the world have found significant benefits for themselves in outsourcing, and by their example they show how with its help you can achieve your main goals.

Many emerging markets often face a shortage of skilled and talented workers. Company Texas Instruments opened a research center in India, which has become a real salvation for many developing companies, providing them with talented and competent employees.

American company Hasbro, a toy manufacturer, was able to overcome the “color crisis” that affected many toy manufacturers in 2007. Hasbro treats its contractors as strategic partners, despite the fact that many companies try to stay aloof from their partners and keep them out of their business.

Pharmaceutical company AstraZeneca captured the Chinese market and became one of the largest in its field thanks to the investments it made in many areas - from production to sales. Collaboration with many universities and organizations also contributed to a significant increase.

Despite the possible risks, the world-famous company Procter & Gamble nevertheless transferred some areas of its activities to other countries. After this, the company's productivity showed a significant rise, increasing by 60%. More than 400 types of products were developed outside the company, which began to generate 10 billion more income for Procter & Gamble.

There is an opinion that in times of general globalization and the rapid development of the business segment of the economy, being a highly specialized specialist is extremely unprofitable. This is a completely false statement. The narrower the specialization of a company or person, the higher the professionalism and deeper the knowledge. If some related activities seem burdensome to the company in terms of money or other costs, outsourcing comes to the rescue.

Outsourcing, definition and origin of the word

The word “outsourcing” is of English origin and comes from the merger of two words: out “external” and source “source”. Thus, outsourcing is, in simple words, the process of a company transferring part of its production or business processes to another company that is an expert in this field.

Delegating processes not related to the main production, but are strategically important for the outsourcer (the company taking on “other people’s” functions), the company makes a mutually beneficial exchange.

It is worth distinguishing between the concepts of one-time support and outsourcing. One-time support is episodic in nature, and an agreement is concluded with the outsourcing company for the provision of outsourcing services for a certain period of time.

What pushes companies to resort to outsourcing? First of all unwillingness to waste precious time for areas accompanying the main activity: software, accounting, technical services.

Outsourcing allows you to entrust the management of these areas to professionals, and concentrate all your efforts on solving the main strategic and production tasks.

Types of outsourcing

1. Production outsourcing. Some production functions are transferred to a third party. For example, advertising agencies that use the production facilities of a printing house.
2. Business process outsourcing. The company transfers business processes that are not its main activity to a third party. A classic example is outsourcing of accounting services.
3. IT outsourcing. The company's information systems are transferred for maintenance to organizations involved in technical support and software. The list of transferred functions may include: website creation, software support or development, maintenance of computer and related equipment.

When transferring auxiliary business processes to an outsourcing company, they implement . Correctly selected metrics improve the quality of interaction between companies.

Outsourcing allows companies to focus on what matters most. Diversification - expand the scope of an organization’s activities or product range, read more about diversification.

Advantages and disadvantages

When deciding to outsource some functions, you should not rely only on the experience of Western colleagues. The general state of the economy and the position of the target market segment should be taken into account.

However, one cannot be one hundred percent sure of the success of this enterprise. This is due to some features inherent in outsourcing as a developing area of ​​business.

The main task of outsourcing is to move non-core and highly specialized areas of activity outside the scope of the business.

Let's start with the obvious advantages that come from outsourcing processes related to the main activity.

• From an economic point of view, hiring an outsourcer allows a company to significantly reduce costs. After all, the company will not have to maintain an additional structure and increase its staff. Transaction costs may also decrease. Some fixed costs can be transformed into variable costs depending on the needs of the company in a particular period of time.
• From the point of view of implementing strategic tasks, outsourcing makes it possible concentrate resources on core production, and improve operational control. In addition, the process of introducing new technological or management operations is facilitated.
• On the technological side, outsourcing opens up access to higher technologies. If the staff does not have the necessary specialists, they can be attracted through an outsourcing program. The quality of service when engaging an outsourcer increases significantly, since the third-party company undertakes to control the quality of the work provided under the contract.

Of course, there is another side to the coin. Let us outline the main shortcomings that may prevent a company from achieving its desired goal through outsourcing.

• Rising costs. This is possible if a company outsources too many processes. In addition, the implementation of an outsourcing system requires careful calculation of costs and comparison of them with the expected economic effect. Transaction costs may also increase. The possibility of bankruptcy of the outsourcing company should not be ruled out.
• Control over the execution of outsourced processes may be lost. Management may lose the connection between management and business practices. Managerial flexibility is reduced.
• The danger of concentrating technological processes in one place. This again deprives the company of flexibility in certain business processes.
• Lack of a clear legal framework for outsourcing. In addition, many companies are afraid to delegate business processes to others due to fear of information leakage or possible violation of contractual relationships.

The definition of a company's gross profit or and how is used to evaluate the operating performance of a firm.

For more information about the use of outsourcing in the activities of online stores, see the link. From delivery and outsourcing of accounting services to the transfer of almost all functions of an online store to the management of external companies.

Outsourcing examples

Henry Ford can be called the forefather of production outsourcing. He was one of the first to understand that no company can be self-sufficient.

The head of the automobile company sought to personally control all stages of production, but he was soon faced with the exorbitant costs spent on servicing all areas of the company's activities.

Then he turned to independent companies for help, which took on some of the tasks. Currently, Ford produces only 30% of its components independently; the rest of the production is outsourced.

Another giant that knows firsthand the benefits of outsourcing is IKEA. IKEA practically does not have its own production; instead, it cooperates with 2,500 suppliers, proven over the years. IKEA's logistics functions are also delegated to a third party.

It turns out that IKEA is directing all its resources to retail business organization, and the remaining services and business infrastructure are outsourced.

Kodak decided in the early 90s that leadership in the field of high technology was not its strategic goal. It outsourced all IT areas to IBM, which was precisely trying to gain leadership in this segment. An ideal example of mutually beneficial outsourcing.

Prospects for the development of the outsourcing market

In general, outsourcing seems to be a profitable deal for many companies that do not have enough resources for total control of all stages and processes of production. World statistics confirm this.

The American Management Association conducted a survey of 600 firms. It turned out that 20% of them had already outsourced some financial operations, and 80% had outsourced administrative functions.

Such statistics give reason to assume that an increasing number of companies will be looking at the possibility of using outsourcing.