What is outsourcing?

More of today's successful companies are relieving themselves of non-essential business problems that take up so much of their time. In the process, they are saving money. Outsourcing is their key. With outsourcing, a company brings in a partner with the expertise and resources to run non-core functions of its business.

Non-core is defined as a department or service that supports your business but does not drive it. For a typical business, data entry, clerical, and source document microfilming and or imaging are prime examples. They are needed for profitable operations, but they do not define the business. With outsourcing you can manage these non-core functions without having to run them. Running them is your partner's job.

There are two keys to making outsourcing work for you, finding the right partner and managing your partner.

Why outsource?

Major benefits can be calculated in terms of organizational responsiveness and not just cost savings. In other words, redefinition of jobs, plus better use of people and corporate resources are very likely to play a greater role in the decision to outsource the data, forms and document processing.

By outsourcing non-core functions, you can:

1. Reduce & control operating costs
2. Improve company focus
3. Utilize current technologies without capital investments from your organization
4. Redirect resources toward activities which have the greater return
5. Control expenses by outsourcing on an "as used" or "as needed" basis.
6. Share Risks
7. Improve production and eliminate backlogs
8. Provide immediate access to information and images
9. Utilize professionals to develop a complete solution for your business

The benefit of outsourcing is field tested and proven. Few internal departments can compete with the quality and turn-around time of IntegBusiness Services staff.

Is "contracting" or "contracting out" just different terminology for "outsourcing"?

These two terms are often confused and they are not the same at all. Contracting is when a company (buyer) purchases goods or services from another company (supplier or vendor). In this situation, the buyer "owns" and controls the process. In other words, the buyer tells the supplier exactly what it wants and how it wants the supplier to perform those services. The supplier cannot vary from the buyer's instructions in any way. The buyer can replace the supplier quite easily by breaking the contract.

In outsourcing, the buyer turns over the control ("ownership") of the process to the supplier. The buyer tells the supplier what results it wants the supplier to achieve, but the supplier decides how to accomplish those results. In outsourcing, the supplier has expertise in a certain process (such as desktop, or human resources, or logistics, etc.), and it has economies of scale. If the buyer were to dictate to the supplier how to do the job (as happens in contracting), the buyer would be destroying an important aspect that makes outsourcing work ? the value that is created by using the supplier's expertise and economies of scale. Telling the supplier how to do the job also eliminates accountability on the part of the supplier, and this is an important element in successful outsourcing relationships.

To illustrate this point, consider this example of contracted vs. outsourced printing services.

Contracted: The buyer says it wants 500 copies of the product. The buyer tells the supplier what kind and weight of paper to use, what method to use in binding the product (staple, glue, clips, brads, etc.), how many people should be working on the project, etc...

Outsourced: The buyer says it wants 500 copies of the product and it needs to be first-rate quality, bound, produced at a cost that is lower than what it costs the buyer to do it in-house, and accomplished faster than it could be done by the buyer in-house. Then the supplier decides how to accomplish the quality, lower cost, speed, what type of paper and binder to use, etc.