Outsourcing 101: What are the Different Types of Outsourcing

Posted by Maria Katrina dela Cruz

Oct 8, 2020 9:02:00 AM

Today, outsourcing is considered as an expertise necessary if you aim to scale your business or go head-to-head with the big names in the industry. With different types of outsourcing at present, it is of essence to find out which one best suits your company needs.

leaders discussing different outsourcing types
Behind Outsourcing: Why is Everyone Doing It? 

In our earlier blogs, we have discussed the various benefits of outsourcing for businesses. It’s cost-effectiveness, wide capacities and the flexibility it lends your team in terms of workload are only the facade of this engagement. 

Running highly efficient operations in-house is possible, but is almost restricted especially if you’re a startup. This applies to established firms as well. If all hands on deck are already occupied, other responsibilities will be neglected. But through outsourcing, you have the guarantee that you’re operating and producing the best results.

What are the Different Types of Outsourcing? 

The outsourcing service you hire will depend on the kind of support your firm needs. Here is a complete rundown of the various outsourcing services and how they work: 

  • Professional Outsourcing 

Contracting your professional support from a third-party provider is the most common outsourcing type. This includes works of an accountant,  legal, purchasing, and IT support.

The biggest benefit of professional outsourcing is its massive help in keeping costs at a minimum. Hiring in-house talents would mean having to pay for tax and benefits, equipment costs and even having to train them but through this type of outsourcing service, you avoid a lot of overhead costs in the long run. 

How it works: If your firm is having a hard time getting clients, you can outsource marketing services to professionals who can strategize marketing plans and better market your company. 

  • IT outsourcing

To date, technology has been playing an important role across all business facets. Industry giants such as Google, WhatsApp and Skype have all outsourced their IT functions at some point in their operations. 

From software development up to maintenance and support, firms have outsourced their IT departments  to store and manage their data, though some large companies only outsource a part of their IT functions.

How it works: Companies are contracting developers to countries with high software expertise

Read Next: Efficiency of Outsourcing as a Business Strategy

  • Manufacturing outsourcing 

Another outsourcing business model is manufacturing outsourcing. Producing your own product can come with a very high cost because of the price of raw materials and the labor cost. But if you contract your production needs to a manufacturing company, you get significant cost reductions without sacrificing the quality of the product. 

How it works: Apple’s iPhone line is wireframes and designed in California but the manufacturing is done across different locations in the world.

  • Project outsourcing

Project outsourcing is focused on getting a project, or even a part of your project, off your back. You don’t want to compromise the output  just because you don’t have the time to focus on them or the skill to handle them well. 

Contracting your projects to third-party professionals comes in handy especially if you don’t need help full-time. You can temporarily outsource your projects rather than hire people onboard. 

How it works: If your firm wants a professional to keep tabs and improve your website’s back-end for an entire campaign period, you outsource a trained Web Developer to do the job for the given time.

  • Process outsourcing

Among the types of outsourcing services, process-specific outsourcing is an important one. This means contracting a very specific task or internal procedure  to ensure the continuity in your system. Process outsourcing discusses the nitty-gritty jobs and niched process that allows you to focus on what you do best.

How it works: Some firms outsource their recruitment needs to an Human Resource agency and hands them over the job of looking and onboarding the right talents for the organization. 

Read Next: How to Select the Best Financial Accounting Outsourcing Services

Recognizing the different types of outsourcing and how they work for your benefit can transform the way you do your operations. If you integrate outsourcing into your strategy, you don’t only save costs and focus on your core strength; you also give your team a chance to upskill their existing competencies and mold them to be better assets of the business.

If you’re looking for outsourced bookkeeping services, look no further than D&V Philippines.  We have a wide expertise in handling the numbers of businesses across various industries and broad experience in using top-of-the-line software to better handle your finances. Download our Outsourcing: How to Make it Work guide today and know how we can be your reliable outsourcing partner.

finance and accounting outsourcing ebook

Topics: Accounting and Bookkeeping Services

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