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Everything you need to know about
Which Is The Best Example Of Outsourcing

There is no denying that the human progress we experience today has everything to do with the division of labor. As a result, outsourcing inevitably came into existence, and the world later realized the significant contribution of this practice in 1989. (1) And towards the end of the 20th century, outsourcing became a viral business strategy.

Today, the United States of America, Japan, and Western Europe are among the places where outsourcing services are in high demand. In other regions, such as Asia and the nations of the former Soviet Union, outsourcing services have been developing slowly but steadily.

Every business demands the business owner to be practical and rational. Take a look at this scenario; for instance, you are a financier, a lawyer, or a manager, and you aim to optimize expenses while reducing the time needed to create your products or services. To make the best and most effective use of your costs, you need to attract resources from outside, and outsourcing is among the best ways to achieve that.

Undoubtfully, you don’t want to maintain a large staff because that would mean spending resources on salaries, taxes, and office rent. Thankfully, in this 21st century, you can choose to work with an outsourcing firm.

In this article, we have highlighted the best outsourcing examples and case studies to give you an insight into these services and how you can apply them in your business. But before that, let’s start with the outsourcing basics.

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You need to know:
Outsourcing Definition

As the name suggests, outsourcing is the business practice that involves hiring an external party, another company outside your company, to create goods or perform services that, traditionally, your company’s staff and employees used to perform in-house. Most big companies like WhatsApp, Alibaba, and Google usually undertake the outsourcing practice as a cost-cutting measure. And because of that, outsourcing can significantly impact a broad spectrum of jobs ranging from manufacturing to customer support to the back office.

Back office jobs are typically found within you IT department. Positions like programmers, engineers, developers etc. But why about front office positions? well they can also be outsourced to benefit your company. To further clarify this we went ahead and wrote a comparison between front and back office that can be found by clicking on the blue “comparison” text.

Outsourcing allows companies and businesses to focus on their core competencies and realize greater flexibility in operating and maintaining their supply chain while meeting customer demands effectively. And as Derek Gallimore (1) reports.

“Offshore staffing is a business tool that allows companies to hire incredible offshore staff at an enormous discount…outsourcing transforms businesses by changing the foundation of employment norms.”

– Forbes

Which Is The Best Example Of Outsourcing
Which Is The Best Example Of Outsourcing

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Top 5 Main Advantages Of Outsourcing

  • Reduction of personnel costs. 
  • Removal of the overall cost.
  • Accessing higher-quality services.
  • Focusing on the main activity.
  • Sharing responsibility.

What Are The Main Features Of Outsourcing?

The primary features of outsourcing include;

  • An agreement on transferring certain functions
  • For long-term cooperation, the term of the contract ought to be a minimum of one year.
  • Transfer of only secondary tasks to the outsourcer. 
  • Possible relegation of some business processes.

However, it is essential to note that outsourcing slightly differs from other forms of cooperation in that the contractor doesn’t create the main product or service. Outsourcing firms only execute secondary tasks, and that’s all. But as a business owner, you can delegate authority to outsourced professionals in maintenance, bookkeeping, recruitment, etc. This will assist your enterprise in concentrating most of its resources on the main activity.

Throughout the global business industry, office and warehouse cleaning, advertising, and website development occupy the top spots of the best outsourcing examples. A detailed review of these and more outsourcing examples is right below in our next section.

Which Is The Best Example Of Outsourcing

The Most Popular
Outsourcing Examples

Advertising

Did you know that advertising is the best example of outsourcing because it is the trade engine? Unfortunately, many business owners aren’t ready to invest hugely in advertising, forgetting the many benefits of outsourcing in this sphere. For example, you can reduce the salary fund and don’t have to employ and train internal specialists. You can also legally minimize taxation.

Nowadays, regardless of whether you have a small internet shop or an energy giant, outsourcing in advertising is vital.

Cleaning Outsourcing

If you have been in a skyscraper, you have probably come across business centers. That means you may have seen some window washers hanging in the air while cleaning countless windows. That best describes a cleaning service outsourcing. A professional cleaning firm is all you need if you have faced numerous issues finding responsible and qualified cleaning staff. Dina Gerdeman (2) states,

“…those who outsourced their way out of cooking, cleaning, household maintenance, and other time-sucking tasks reported greater life satisfaction.”

– Forbes

Cleaning companies often offer services to business centers, small shops, supermarkets, pharmacies, and beauty salons. Cleaning firms are known to be convenient, fast, and professional.

It-outsourcing

Can you establish the difference between Frontend and Backend developers, Desktop and Full-stack developers? Can you distinguish between a qualified IT developer and a less qualified one? If not, your best option is to reach out to a reputable and reliable IT outsourcing company. Additionally, every business looks forward to hiring highly qualified IT-Specialists. Unfortunately, not every business can pay a good salary, and due to the limited work scope, not all of them need to have such a specialist in-house. IT-Outsourcing firms keep computer equipment in working order and develop new software.

This is where a company like Sonatafy can help with your IT outsourcing needs. We specialize in nearshore software development. Our goal is to provide your business with top talent from countries closer to home. To learn more about our nearshore software development services and how it can help your business please click here.

Labor Protection Functions

Labor protection outsourcing companies’ work volume needs extra resources and special training. For this reason, most executive directors or business owners prefer transferring these functions to a more experienced outsourcer instead of creating a special department of labor protection.

Your labor protection outsourcer will offer numerous services, from organizing how to obtain permits for high-risk work to briefing employees upon hiring, managing employee training, and filling out logbooks. They also develop and store labor protection documentation, organize medical checkups, perform a technical inspection of high-risk equipment, etc.

Choose The Right
Which Is The Best Example Of Outsourcing

Legal Services

Suppose your venture isn’t in the habit of breaking the law. Is it necessary to have a permanent lawyer on staff? Not really! Sign a contract with a law firm, get the qualified legal aid you need, and pay only to solve your legal issue. Law offices’ different aspects of business legal support in their outsourcing services range from labor, tax law, and corporate and legal consent in court. International law firms also help enterprises with foreign economic activity and exchange regulations.

Accounting

Did you know that in most companies, the financial side is one of the most complicated aspects of business processes? Accounting outsourcing entails the transfer of an organization’s functions and bookkeeping. In most cases, the volume and nature of the required services dictate the principles of interactions between your company and the outsourcer.

The outsourcer must be knowledgeable and experienced in the accounting sphere to achieve the goal of managing multiple business processes simultaneously. Transferring accounting functions to a third-party company allows organizations to save significantly on staff salaries, taxes, and installing and updating accounting software.

Personnel Outsourcing

To reduce the costs of worker salaries, business owners opt for personnel outsourcing. Although the hired workforce is part of a third-party team, the authority to assign tasks to them also vests in you. Personnel outsourcing entails recruiting firms specializing in the search and selection of personnel. Therefore, they help the hiring company find a highly qualified employee in the shortest time possible. Unlike personnel outstaffing, personnel outsourcing requires that the outsourcer research the labor market while following the latest supply and demand trends for specific jobs.

Outsourcing In Production

Think of a famous brand like Nokia. Being a Finnish company means that most of the company’s products, like Nokia phones, are manufactured in Finland. But did you know that not all Nokia products are manufactured in Finland? Nokia manufactures its devices everywhere, including in Mexico, Hong Kong, Germany, China, Brazil, and more.

Huge companies with large production capacities actively use outsourcing in production. For example, all the global brands in the automotive industry transfer several functions to highly specialized and experienced third parties. That also includes technology and telecommunication enterprises and energy companies.

Logistics Outsourcing

Logistics outsourcing came to ease the burden of enterprises having to invest a lot in preparing and maintaining a large staff for coordinating transport and warehouse processes. Today’s businesses no longer need to maintain a special transport department since logistics companies take care of that. These third-party companies can deliver your goods throughout the globe.

The advantage is that leveraging this opportunity reduces costs while simplifying business process management. And that’s not all! Logistic firms can offer both transportation services and stock storage, meaning it saves business owners the hassle of searching and renting/leasing warehouses and worrying about the safety of their products.

Knowledge Process Outsourcing

The United States of America is the first country to start embracing knowledge process outsourcing (KPO). It is a new direction that most parts of the world are not yet familiar with but is critical in managing companies’ processes that need comprehensive study and detailed analysis. This means that outsourcing companies in this field form a knowledge database responsible for managing it.

While the outsourcer could be in the same country or another, workers of various firms or divisions of a large business carry out the knowledge and information work.

It Outsourcing Market Overview

Over the past couple of years, the universal tech talent scarcity has significantly contributed to outsourcing becoming an increasingly appealing alternative for businesses. It is the ideal solution for lowering software development costs and overcoming the challenge of finding qualified professionals, among other issues. The emergence of the COVID-19 pandemic led to a tremendous increase in remote work. According to Bryan Robinson (3),

“Remote opportunities leaped from under 4% of all high paying jobs before the pandemic to about 9% at the end of 2020, and to more than 15% today.”

-Forbes

Experts project that remote employees may account for approximately 52% of the U.S. workforce by 2022. Today, around 65% of all successful businesses and organizations integrate outsourcing into their model. According to a CNBC report, a Harvard professor found that outsourcing chores could make people as happy as getting a raise of $18,000. (4) That finding explains why Dutch firms would offshore IT talent to offer excellent team scaling flexibility and save money.

Within the outsourcing model they’re various types like onshore, offshore, and nearshore. All of these terms revolve around where your staff is being sourced. Now, in recent year nearshoring has quickly become the preferred method in the industry. Why? Well common time zones, language and cultural similarities just to name a few. But to figure out why nearshore outscoring is important we dug deeper and wrote an entire detailed article about it. Click to learn more.

Which Is The Best Example Of Outsourcing? – 7 Case Studies

The following are seven successful outsourcing examples of how companies collaborate with outsourcing teams to develop their operations and gain a competitive advantage in the global market.

Slack

After engaging the Canadian design company MetaLab, Slack outpaced the competition in the international market after getting the help it needed to grow the beta version into a popular product. 2017 saw Slack secure a $250 million investment worth $5 billion via online outsourcing logo or website design.

Whatsapp

Having little startup funding, WhatsApp needed to maintain low operating costs. So, it reached out to Eastern Europe to help with the technical ability to develop and promote its product. Today, the corporation hires Russia’s offshore software developers because of what it terms the country’s sound engineers. The overseas personnel handled development, while most internal personnel focused on customer service and operations.

Skype

After realizing that product development was not the most critical factor in Skype’s success, the company located the necessary abilities and expertise at a reasonable cost. This move helped Skype to keep developing the online program and keep prices down. The company looked to Estonia, sourced talent, and hired many developers. With time, these hired developers exhibited success, and the firm absorbed them as partners. Skype’s top reasons for outsourcing included capacity concerns, cost reductions, and access to unlimited abilities and talents.

Google

Thanks to outsourcing, Google has grown into a giant technological corporation from a basic search engine. The company has been among the largest outsourcers for decades for outsourcing non-core tasks, including administration and IT labor. Since it recognizes that it cannot accomplish everything despite its scale, the corporation has listed its primary reasons for outsourcing. They include addressing capacity challenges, lowering prices, accessing a pool of abilities and talents, and boosting quality.

Alibaba

Like Amazon and eBay, Alibaba is an online eCommerce that has risen to prominence primarily due to outsourcing. Since Alibaba was already in China, a lower-cost nation, the paradigm for outsourcing transformed, and this time it was not for financial reasons. The company could keep local manufacturing and resource costs low, but unfortunately, the talents needed for growth were not accessible at scale within the country’s borders. Therefore, the now online eCommerce giant reached out to outsourcers and partners from the U.S. The site outsourced web development to the U.S. and subsequently blossomed.

Basecamp

Recognizing that trying to execute every task on their own was not a good strategy was the first step toward Basecamp’s success. The project management platform realized that the level of internal workflow and client support issues they were experiencing was alarming. Therefore, Basecamp outsourced some vital operations to allow its employees to focus on core business to address this problem. The company kept improving the app using remote developers. At the same time, the firm’s in-house workers concentrated on internal operations and organization, and that’s how everybody came to know Basecamp.

Citigroup

Citigroup began outsourcing its IT operations in 1992, and today, it runs multiple offshore facilities in the Philippines, Poland, and India. And after reportedly cutting around 11,000 employees at the corporation’s headquarters in 2012, remote workers overseas are now performing most of its IT Functions. Additionally, Citigroup has continuing agreements with TATA Consultancy Services, Wipro, and other multiple outsourcing companies.

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With high-quality delivery web development services and strong customer support and management, we give you the ability to focus on business decisions rather than software development issues.

Common Asked Questions About
Which Is The Best Example Of Outsourcing Services

Which Is The Best Example Of Outsourcing?

The best examples of outsourcing range from Alibaba to Skype, WhatsApp, and many others we have not mentioned above. For example, Goldman Sachs, J.P. Morgan, and Bank of America are the other financial giants that outsource tech talents. In short, what we have provided you in this insightful piece are the best examples, but hundreds of others are available for listing.

Outsourcing has helped many businesses, companies, and organizations locate qualified candidates globally. Therefore, it can also help your business stick to its budget. Outsourcing may be the perfect strategy when you want to expand your business and keep competing internationally.

What Is “global Outsourcing Services?”

Global Outsourcing Services is as the name suggests. But to understand the meaning of this term, it would be best first to know what outsourcing means. Outsourcing is a business strategy that organizations and businesses use to recruit third parties and assign them specific work responsibilities. So, global outsourcing services help companies find these partners in numerous parts of the world.

What Are Global Outsourcing Services Benefits?

The benefits of global outsourcing services include;

  • Cost reduction
  • They help in leveraging business outlook.
  • They can help run your business 24 hours a day.
  • Global outsourcing services leverage core internal resources for critical operations.
  • Outsourcing services also boost a company’s profits.

Are There Any Negative Sides In Global Outsourcing Services?

There are a few opposing sides associated with global outsourcing services like the ones mentioned below;

  • Companies experience increased employee turnover and decreased employee loyalty.
  • These services result in high competition in the domestic market.
  • With outsourcing, there is a high likelihood of increased unemployment in own country.

Is Remote Staffing Different From Global Outsourcing Services?

Remote staffing differs from global outsourcing services since the latter entails contracting overseas workers for offshore business units. On the other hand, remote staffing means working from remote locations.

What Are The Top Global Outsourcing Companies In The World?

Some top global outsourcing firms include Wipro, IBM, Infosys, Accenture, Nike, and Alibaba.

Why Do Companies Decide To Outsource?

Companies decide to outsource to reduce costs primarily. That means that companies will not have to employ and train full-time employees and pay them benefits. Ultimately, businesses save money and become more profitable.

Besides reducing overhead they’re many other reasons for a company to choose this business model. Specialized support, and higher team member count to name a few. In fact, we discuss this topic in detail, which can be found by navigating to the following page.

Which Is The Best Example Of Outsourcing Quizlet?

The best example of outsourcing Quizlet is when a shoe firm in the U.S. launches a factory in China and employs a Chinese workforce to manufacture the shoes.

What Is The Best Outsourcing Brainly Example?

The best example of outsourcing Brainly is when a U.S. shoe company opens a factory in another country like China and contracts Chinese employees to make the shoes.

Final Remarks

We hope that you have gathered sufficient, reliable, and complete information from the top picks of the best examples of outsourcing we highlighted in this article. While there may be plenty of outsourcing success stories, there is undoubtedly something you should learn from the ones we have provided you with here. So, what is your best outsourcing example, considering that outsourcing services, including outsourced software development and IT outsourcing, keep gaining popularity every day?

Knowing how to make your business processes easier by outsourcing non-core functions is vital as it helps you channel all your focus and energy into what your business was founded to do. Eventually, your enterprise should be able to balance between the profits received and the resources spent. So why not contact a reliable and experienced outsourcing company today to get started?

References:

  1. Offshore staffing is a business tool that allows companies to hire incredible offshore staff at an enormous discount…outsourcing transforms businesses by changing the foundation of employment norms. – Forbes Quote
    https://www.forbes.com/sites/forbesbusinesscouncil/2021/09/14/the-essentials-of-outsourcing/?sh=15db3ee93795
  2. …those who outsourced their way out of cooking, cleaning, household maintenance, and other time-sucking tasks reported greater life satisfaction.– Forbes Quote
    https://www.forbes.com/sites/hbsworkingknowledge/2017/11/14/want-to-be-happier-spend-money-on-avoiding-household-chores/?sh=19bc51832553
  3. Remote opportunities leaped from under 4% of all high paying jobs before the pandemic to about 9% at the end of 2020, and to more than 15% today. – Forbes Quote
    https://www.forbes.com/sites/bryanrobinson/2022/02/01/remote-work-is-here-to-stay-and-will-increase-into-2023-experts-say/?sh=201cb5ed20a6
  4. Outsourcing the HR Function– SHRM
    https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/outsourcingthehrfunction.aspx