Outsourcing occurs when a company contracts out a portion of its business to another company; these jobs would have traditionally been done by in-house employees. It's important to make a distinction between outsourcing and offshoring. Jobs can be outsourced to local companies that specialize in that particular area. Offshoring, though still a form of outsourcing, is when a company outsources portions of its work to be done overseas. This is a growing trend as companies find that outsourcing and offshoring lead to greater efficiency and cost savings as they don't have to pay salaries and benefits to employees, and instead pay contract fees for completion of duties. This also allows companies to allocate greater resources to parts of the company that they excel at.
Long gone are the days when a company's production facility was attached to its main office. A large number of companies send their production offshore due to cheaper production costs overseas. Keep in mind that cost savings aren't the only factor leading outsourcing and offshoring of manufacturing activities. As employment trends in North America have changed over the years, so have skillsets. In many cases it is determined that the quality of the product may actually be better by relocating operations to areas where skillsets required to efficiently manufacture products are available. This doesn't necessarily mean that a company's entire product is manufactured offshore either. Some companies outsource a particular portion of their product to be manufactured or assembled offshore, with the remainder of assembly occurring right at home.
Everyone's received phone calls from telemarketers or customer service agents coming from outsourcing companies – perhaps even coming from overseas. Considering the infrastructure required to accommodate large volumes of telephone calls, there's no surprise that many companies that do surveys, advise customers of promotions or provide product support, outsource these tasks. Given the potential cost savings involved with offshoring these tasks, there's also little surprise that many companies have opted in this direction. However, many consumers have found this to be a frustration as they encounter communication difficulties when dealing with foreign call agents. A large volume of call center outsourcing has been relocating back to home soil in recent years as companies try to avoid aggravating their consumers, and therefore damaging their reputations.
The term freelance writer literally refers to someone who is not an employee of an organization, but rather provides their writing services on a contractual basis. As an extension to that, many outsourcing companies providing marketing services also create marketing copy for the clients they serve. This is a common trend as it has become more efficient for everyone from newspaper, magazine and book publishers to websites, marketing companies and even universities find it more economical to locate writers who will work on a contract basis rather than as permanent staff. This also allows writers greater freedom, since they can complete assignments on their own time and work for more than one employer concurrently.
In the same vein as writers, graphic designers are also often hired on a contractual basis as opposed to as full-time staff. Freelance graphic designers design content for web and print for all kinds of organizations. Additionally, many outsourcing companies also provide design services to their clients, which is often much more efficient than bringing on an entire design department when your company may only need the occasional mail-out or website design update. For many non-publishing industries, their design needs tend to be cyclical and short term.
Information Technology Support (IT)
In a high-tech world, it's easy to provide IT support from almost anywhere in the world. Help-desk agents and support staff are indeed often found offshore. It's fairly simple to walk customers through their technical difficulties over the phone, or support staff can easily access your computer through the network and make the necessary modifications to get your computer up and running as it should be. It literally makes no difference if the person assisting you is in the next office, or on the other side of the world.
Security guards are absolutely everywhere – the mall, the bank, at school, concert halls, and night clubs. You may even see some high-profile people with their own security guards, or perhaps in large condominiums or gated communities. However, this position is one that's rarely done by an employee of the location being guarded. Private security firms are typically contracted for the majority of security duties, as they carry the necessary insurance and can offer adequate training and support to their staff.
The Bottom Line
What makes a job ideal for outsourcing? Typically these are jobs that fall into an extreme – requiring either little skill or very highly skilled workers. These are jobs that are typically not deemed to impact the overall function of the company, which is important because organizations typically lose some of the control over these functions when they outsource them. Jobs that are sporadic, or can be completed more efficiently or cheaply elsewhere are also prime targets. In modern day, we typically see outsourcing as a bad thing. The stereotype is that outsourcing takes jobs away from local workers and gives them to foreign workers. In some cases this may be true, though keep in mind that some of the low-skilled positions may not easily be filled by the local workforce for lack of interest in doing the work. Also, when an organization uses a local outsourcing company, the jobs stay right in the community, simply being handed off to another organization that might be able to do a better job.
More From Investopedia