Outsourcing has been on the lips of business leaders everywhere for a number of years now. And yet, there is sometimes confusion on just what outsourcing and an outsourcing company is. That said, despite the different views on what outsourcing really is, the common thread is that it involves an organization handing over one or more processes to a 3rd party to execute at an agreed fee.

There are different types and elements of outsourcing that every business can consider. One is the outsourcing of value added services or of key support functions. This may be as ordinary as providing support services to a company or as complex as taking on core business operations. Support functions an outsourcing company may provide include technical IT support, Human resources, Cleaning services, Accounting services etc. The value added services provided by these companies may include Sales, Purchasing, etc.

Partial or Total outsourcing involves the process of partially outsourcing business process or completely outsourcing an entire business operations. An example is a company that provides customer care services. It may choose to outsource this department to an offshore outsourcing company due to the affordable expert knowledge found there.

There is also outsourcing of only operational functions such as outsourcing human resources versus outsourcing of functions, tools and personnel such as IT outsourcing. Business Process Outsourcing involves the use of outsourcing companies that carry complete responsibility of the operations they undertake. This approach requires a clear-cut definition of the roles and responsibilities expected to be undertaken by the outsourced company.

As said before, they are numerous benefits of outsourcing companies. The organizations that choose to outsource their business operations are able to focus on the core businesses. They can concentrate their efforts and resources on the core businesses. These organizations also reduce the operational costs. This creates a flexible cost structure that is directly related to the performance of the service provider. The organizations have access to competent personnel at cheaper rates. Outsourcing companies hire highly skilled personnel that increase the quality of services they provide.

An outsourced project undergoes the following phases before it is completed. Phase 1 is the planning and preparatory phase. This phase involves baseline analysis, determining future procedures and defining the goals and expectations of the project. Phase 2 is the initiation phase and it involves the contract negotiations with the provider. Phase 3 is the implementation phase and it involves the transfer and set up of the facility and the actual start of operations.

As for the continuous life of an outsourcing initiative, there are only two phases involved. Phase 1 is the review and evaluation of the relationship and implementation processes. Phase 2 involves the renewal of contractual terms or its termination that transfers all business functions either to a new service provider or to the organization.

Daven Michaels Author of the book Outsource This!