Outsourcing is the act of assigning part of a business process to a third party on a repeated basis. It differs yet is similar from Proper Employment and Out-tasking.
The outsourcing process has the aspect of employing a third party to perform an assigned task without the liabilities from “labor laws.” This third party may be within the same country as you or be from a country a thousand or tens of thousand miles away from you. With this, you can easily terminate your relationship with such party without immediate legal precautions from the “labor laws” if they fail to meet your standards. If they meet your standards or if you are satisfied with their performance, you can again engage a contract with them to do another assigned task, preferably of similar nature.
The outsourcing process enables to enjoy having a reliable “regular employee” without the hassle of answering to the boundaries and rules set by the “labor laws.” You can continuously assign tasks to this third party and expect results from them as you would be expecting from one of your regular employees. However, if you feel that they are not able to perform such assigned tasks and meet your standards, you can easily terminate your relationship with them.
Outsourcing can simply be defined as the continuous out-tasking of a specific part of your business process.
If you assign a specific task to a third party, but not properly employ them, it is called out tasking. If you continuously out-task a specific part of your business process, it will now be called outsourcing.
But why should you outsource?
For most cases, the objective of outsourcing is to reduce cost, but that is not always the case. Most companies outsource to find cheaper source of labor and get the results they want as they would have if they are to employ properly. They can offer smaller benefits, compensation package, or cheaper deals, but still get the same or sometimes better results.
Outsourcing is also used if a certain company or individual has the inability to perform a specific task and get the result they want. These company uses outsourcing to look for an individual or a company who could provide better results than if they were to do the same task. The cost may be slightly higher but the results are better.
Outsourcing therefore has two primary objectives:
1. To get labor at reduced cost but get the same or slightly better results.
2. To get better results for the same or slightly higher cost.
What is outsourcing?
It is the act of assigning part of a business process to a third party on a repeated basis.
When a company, a business, or an individual “subcontracts or hires” a third party to do some of the business processes on a continuous or a frequent basis, it is called outsourcing. It is often confused with “proper employment” and “out-tasking.” It will be much clearer if we define the latter two to be able to fully understand the definition of outsourcing.
Proper employment means you will be giving him/her a regular job based upon his/her capability, skills, and expertise. He/she will, in return, do the job on a regular basis to gain income. In this process, both you and the employee are bounded by the “labor laws” of your country in which both of you should abide.
The employee must perform his/her assigned tasks and meet the standards set by you, the employer. In the event he/she is unable to perform such assigned tasks and meet the standards, then you may terminate the employment contract. You, however, in return are liable to your employee. You must provide him/her with the proper compensation, benefits, and due process (in the event of termination) as determined the existing laws on labor/employment in your country.
Out-tasking means you will be assigning a specific task to someone based on his/her capability, skills, expertise. He/she will, in return, do that assigned task to gain income. This is a one time event, and neither you nor that person is liable by any laws.
The employee may or may not perform the assigned task and/or meet the standards set by you. You, on the other hand, may or may not pay him/her upon completion of the assigned task. This way whichever action you and/or that person do will have an effect to both your reputations as an employer and employee respectively. However, neither you nor the employee is bounded by the “labor laws,” so no lawsuits can be made by either party.
So, what then is outsourcing?
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