Learning the history of outsourcing is an important first step when it comes to deciding if it’s the right move for you. You may even be asking yourself, “What is outsourcing anyway?”
The definition of outsourcing is simple. It’s basically the contracting out of some business or personal task, either one you have previously done internally or one that you have a new need for. So as you can see, an outsourcing definition has quite a broad scale.
The history of outsourcing begins in the Industrial Revolution when companies began looking for ways to manufacture their products as cheaply as possible. Initially companies focused on controlling their entire supply chain, but gradually they began to focus more on cutting cost, so many processes began to go overseas.
It wasn’t until 1989 that outsourcing was formally named as a business strategy, although many businesses were already doing it. Manufacturing was one of the first processes to go overseas, although it didn’t take long for support services to follow.
Today it’s not uncommon to have customer service outsourced to India or other parts of the world. Businesses are constantly looking for strategic partnerships that will enable them to outsource successfully and inexpensively.
Small business owners may have many reasons for outsourcing. If you’re the only one in your business and you have no employees, then that may be the main reason you outsource. Truly unique home based business ideas will grow into a large business that you can’t manage on your own. The only way you’re going to be able to build a successful home business, grow it, and sustain that growth is by implementing proven business strategies such as outsourcing.
Of course there are many pros and cons of outsourcing. One of the main outsourcing advantages is being able to do more with less. You can pay just for certain services instead of paying someone a full-time salary to work for you.
You also don’t have to buy health insurance or pay for other benefits. As the history of outsourcing has shown, having access to a whole world of talent can be a great advantage as well.
Probably one of the biggest disadvantages of outsourcing is not having as much control over your staff. You can choose the company or service provider that you work with, but you can’t choose their employees.
Another potentially big problem with outsourcing is security. You’re letting an outside company have access to information about your business. You should take steps to protect your company’s private information and make sure you aren’t giving the outsourcing company access to more data than they should have.
Many people compare outsourcing with offshoring, and while the two share some similarities, there are some differences. Offshoring is basically the most recent development in the history of outsourcing. Offshoring involves relocating one of your processes overseas.
The most common process to offshore is manufacturing, although that’s continuously changing as labor rates, material costs, and laws amongst other things, are constantly changing in almost every part of the world.