Out-source-ing.
If you dissect the word like this, there is really no need for corporate jargon to define outsourcing, which I observe many people find difficult to understand. Out and source. In a nutshell, it implies that something is sourced from the outside. It doesn't really get simpler than that.
So you're starting a company, or operating one. You want to minimize costs and provide your clients with the best product or service they deserve. You're caught in the middle of this corporate paradox, and you don't know how to wriggle yourself out and cut expenses without affecting the quality of your company's product or service. Hire less employees? Yeah, sure, that would lessen costs, but are you sure the rest of the employees will be happy with the added workload? Of course not. Lessen compensation? Be ready for a barrage of resignation letters. Use below-par technological resources? Good luck handling irate, unsatisfied customers.
In literature, when opposite sides (ideas, really) of the spectrum seem irreconcilable, we usually destroy the spectrum and deconstruct the system to reach consensus. Business economics is not a conventional playground for literature, but some theoretical approaches cross borders and make quite a sturdy bridge. Going back to our analogy, if minimizing costs and quality service are at opposite ends, guess what destroys the paradox and builds the bridge? Yes, out-source-ing.
Basically, when a business outsources, they hire people who are not officially affiliated with their company aka freelancers. For example, the graphic designer of a PR firm has gotten into an accident and could not make it to work for at least two months. It would be unethical to fire the designer on grounds of being in an accident, so the company will hire a freelance graphic designer to do the hospitalized designer's job for two months. The question here, however, is how much was saved, if there even were savings at all? Let's face it. Outsourcing people from within your country beats the purpose—you are basically hiring a different person for the same price. This is where offshore outsourcing comes in.
Offshore outsourcing simply means hiring employees from another country without having them immigrate to your country. For example, you are outsourcing customer service contact to the Philippines because labor in the Philippines is substantially cheaper than your inshore workforce. You don't have to bring them to your country to make sure that they are working at par with your company standards. There are companies who do that for you. They are called outsourcing vendors.
Outsourcing vendors or outsourcing service providers are, shall we say, the manager of your offshore employees. They get to know you first—what services you need, how you want it done, how many employees you need and their qualifications, how much you are willing to spend, and other project-related information that you will talk about at some point of the negotiation. Of course, you need to get to know them as well. What can they do? How do they do it? How long have they been around? What do previous and present clients say about them? Answering these questions is only the first step to building a partnership with your outsourcing vendor.
There is a long list of countries where you can outsource, but as this site is about BPO in the Philippines, I will go ahead and say that the Philippines is one of the leading outsourcing destination globally, second only to India. (Read about why the Philippines makes a better back office than India here.) Recently however, with India's wage inflation, more companies are turning to the Philippines, whose skilled and abundant labor pool are proving themselves adept at customer contact, customer service, and technical support among others. Philippine cities also provide a strategic setting for BPO offices, with clean and safe working environments (The Best Cities to Outsource in the Philippines).
Ultimately, outsourcing can both be a savior and a risk. It all really depends on the right choice of outsourcing service provider. But before you consider it as a business venture, get to know the concept first before actually delving into the real thing. Look at your company and determine which part you can entrust to an outside source and have a contingency plan in case something goes wrong. Don't be blinded by how much you can save with employee compensation. Never forget that a well-deserved profit calls for innovative business measures that disrupt the paradox of cost-cutting and quality service.
