Definition

outsourcing

Also see nearshore outsourcingonshore outsourcing, offshore outsourcing and business process outsourcing.

Outsourcing is a practice in which an individual or company performs tasks, provides services or manufactures products for another company -- functions that could have been or is usually done in-house. Outsourcing is typically used by companies to save costs.

Outsourcing is a common trend in information technology and other industries. Businesses outsource for services that are seen as intrinsic to managing a business and serving internal and external customers. Products, such as computer parts, and services, such as payroll and bookkeeping, can be outsourced. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations.

Reasons for outsourcing

In addition to saving on overhead and labor costs, the reasons companies employ outsourcing include improved efficiency, greater productivity and the opportunity to focus on core products and functions of the business. Furthermore, more companies are looking to outsourcing providers as innovation centers. According to Deloitte's 2016 outsourcing survey, 35% of respondents said they are focused on measuring innovation value in their outsourcing partnerships.

Insourcing vs. outsourcing

The term outsourcing often refers to offshore outsourcing, or the practice of exporting work outside of the United States to companies in less-developed countries, where there tends to be lower labor costs. However, outsourcing is not always the most effective way for companies to save costs. Insourcing, or assigning tasks to people or departments in-house, is sometimes more cost-effective for businesses than hiring outside staff or companies. The term insourcing is sometimes used to refer to employing the U.S.-based subsidiaries of foreign global corporations, a practice also referred to as onshore outsourcing or domestic outsourcing.

Outsourcing can range from a large contract, in which a company like IBM manages IT services for a company like Xerox, to the practice of hiring independent contractors and temporary office workers on an individual basis.

This was last updated in August 2016

Continue Reading About outsourcing

Dig Deeper on Information technology outsourcing

PRO+

Content

Find more PRO+ content and other member only offers, here.

Join the conversation

4 comments

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

The continued economic insecurity is fuelling the upward trend in outsourced model and
this seems to be particularly true for recruitment function and human resource
outsourcing.

Many companies, forced to slash overhead and generate more revenue from their
primary products or services, now have a better understanding of what functions
are core to their success and which are context.

Payroll processing is context, for example, because it is a common and necessary
function across all companies. No matter how well payroll is processed, it
gives the company no competitive advantage. Similarly, hiring top-performers is
core, but the process to find, recruit and manage the function is context.
Companies use the same antiquated methods, job boards, applicant tracking
systems and people. Outsourcing the Sourcing represents a departure from these
traditional options, but finding, selecting and managing the right one for your
company may be challenging.

Outsourcing of the generalist functions, including payroll, benefits administration and
employee relations, has considerable momentum today. The recruitment function, however,
is now taking the lead

Outsourcing the sourcing is a growing practice and defined as a specialized service that
allows clients to outsource some or all of the recruitment function. In the
Outsourcing the Sourcing function the provider leverages the combination of
strategy, technology, resources and vendor management to improve the
recruitment process. Operating as the client’s internal recruitment function
and strategic partner

At Fiddich Consulting we work closely with the client to improve the recruitment
efficiencies of quality of hire, speed of delivery and cost containment. The
end-to-end recruitment process for many companies encompasses more than just
the sourcing and on boarding of resources. It consists of three key elements
designed to build and sustain a robust talent pool. These are workforce
planning, talent acquisition and engagement and ongoing talent management.

Why Outsourcing the Sourcing?
Organisations outsource recruitment and hiring practices for many different reasons. According to a recent Survey, three business priorities, they are:

“Executing business strategy”, “reducing operating costs” and “recruiting, retaining and
developing a great workforce”. All of these have shaped the needs and triggers
for the adoption of Outsourced Sourcing Model

Key Benefits of Fiddich Consulting Outsourced Sourcing Model
Any evaluation of whether to outsource must begin with a clear understanding of the
intended benefits and how the features of an outsourcing company will generate
the benefit. This is important to ensure the benefits can be monitored and
managed.

To maximise the overall value of outsourcing, the cause and effect logic must constantly be
applied. At Fiddich Consulting we provide features.

Access to a wider talent
One of the key drivers for outsourcing the recruitment process is to improve access to
talent. An outsourcing provider should be able to demonstrate the ability to
attract a larger pool of quality candidates for an organisation over their
internal recruitment team. At Fiddich Consulting we have a comprehensive range
of attraction channels which reach a wide pool of talent. This is due to the
frequency we undertake talent acquisition for multiple clients and build
comprehensive databases of active and passive candidates.

Continues innovation and increased expertise
Organisations looking to outsource their sourcing function often look for a provider to help
them enhance their employment brand and value proposition as well as offer
innovative talent acquisition and mobility strategies.

The demographics of the general workforce are complex and a major impact to hiring
top talent. There are currently different distinct generations working together
making up a workforce that have a wide range of ideas and motivations. In
addition, workforce demographics are constantly changing which can
significantly impact talent acquisition and management success. Many
organisations look to their sourcing providers to assist them in navigating
this confusing and ever changing landscape by utilising their market insight
and strategic recommendations to help them stay ahead of the curve.

Improved supplier management and process
Another significant benefit organisations look to achieve by outsourcing recruitment
process is the efficiencies and cost savings gained from the transfer of
supplier management.

At Fiddich Consulting we enhance the outcomes by assisting organisations in achieving the
optimal recruitment supplier structure for their business.

Sourcing providers should also be able to assist organisations to identify recruitment
process pain points and recommend improvement initiatives. Outcomes from
improved process management can be measured against service level agreements
such as time to fill, quality of hire and candidate satisfaction.

Half the cost half the time

Whilst cost is not the primary factor driving many organisations to outsource it is
certainly an important consideration especially in this economic climate.
Industry data suggests that savings of 15-25% per hire are achieved from
successful outsourced sourcing adoption. The results vary due to initial scope
for improvement, success of the implementation and the methodology and
timeframe calculating savings. At Fiddich Consulting we provide best in class
outsourced sourcing model and have following cost savings

Indirect Cost Savings

Reduced Human resource and hiring manager interaction with agencies
Reduced Human resource and hiring manager involvement in end-to-end administration
tasks
Efficiency gains from process improvement enhanced reporting and control
Productivity gains from a higher quality of candidate attracted and reduced time to fill
Productivity gains from better candidate fit and reduced retention

Direct Cost Savings
Reduced
salary rates from improved market comparison and a more rigorous exception
approval process

Reduced salary rates from enhanced non-salary employee value propositions
Reduced recruitment volume from increase retention and candidate fit
Reduced volume via agencies due to increased internal mobility and pre identified
candidates
Reduced agency fee per hire by reducing agency effort in the process. At Fiddich
Consulting we believe in half the cost half the time business model

For more details, visit www.FiddichConsulting.com
Cancel
very good definition.
Cancel
As many things, done it right and in the right situation and context outsourcing might be benefitial. Otherwise - your mileage may vary.
Cancel
What job functions or services have you outsourced?
Cancel

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

SearchHealthIT

SearchCloudComputing

SearchMobileComputing

SearchDataCenter

Close