A Brief History of Outsourcing

Outsourcing has become one of the major industries in the world today. The emergence of BPO companies has offered a number of services to client companies that simply could not be matched by having those functions in-house. In the modern context, outsourcing means having a third-party provider handle numerous tasks and departments that do not necessarily need to be performed by the main office. However, that was not always the case. The history of BPO services starts not with services and office functions, but with manufacturing.

Prior to the advent of IT outsourcing, manufacturing companies had a virtual monopoly on the demand for outsourcing services during a time when BPO companies were virtually nonexistent. The logic behind it was simple enough. It was far more cost-effective to have manufacturing facilities in the areas where the raw materials were obtained. It cut down on the time required to manufacture a product and eliminated the need to ship the materials long-distance to a separate facility. More U.S. companies began to outsource a number of manufacturing support tasks to countries such as Canada, Mexico, and Brazil in the 1980s.

It was only during the tech boom of the early 90s that these manufacturing companies took a backseat to IT outsourcing. Companies began to hire third-party contractors, BPO companies, to handle more functions. These were no longer support tasks, but functions directly related to the business but did not require local handling. India, having experienced a technological boom of its own, had the necessary infrastructure to handle the initial demand. The first wave came in the form of software development and support. Call center outsourcing companies were not too far behind, with some setting up shop as early as the late 90s.

Contact centers began to overtake the manufacturing industry in the number of outsourcing opportunities during the mid-90s. Their primary clients were American businesses that were cutting on costs. Technical support had been slowly moved to Indian providers due to the country's large pool of technology-related talent. Customer service and sales services from BPO companies had also followed suit. Around 1994, the Philippine government instituted infrastructural and economic reforms to help boost the incentives of foreign investors to take advantage of the country's labor pool. Part of that push involved improvements on the local IT sector. Two years after, a few companies began to move part of their data entry operations into the country.

Outsourcing advantages also began to attract the attention of other industries. Medical and media transcription emerged. Legal transcription services also appeared in India, but companies quickly moved them to the Philippines. The legal system in the Philippines more closely reflected the American one, which made the local talent pool more likely to understand critical precedents and procedures. IT outsourcing has also become important, with an increasing stake in the Philippine BPO market each year.

Currently, BPO companies are worth an estimated $3 billion. Facilities in India and the Philippines are expanding, with China also making preparations to take advantage of the demand. Services that are outsourced have expanded beyond the initial contact centers and data entry. Companies now outsource tasks such as medical and legal transcription, SEO marketing, and content management. This growth has benefited many international companies, and it is likely to continue in the foreseeable future and even beyond.

Outsourcing - The Unique Way to Gain Business Momentum

Today, offshore business process outsourcing has emerged as a happening trend. It refers to the process of getting a job done from another agency, which is generally known as offshore outsourcing service provider. Earlier, the concept of process outsourcing wasn't well recognized by all. But slowly this trend started gaining momentum taking the shape of an industry in certain countries.

Business process outsourcing has become the highly recognizable phenomenon. At the initial stage, small and low grade jobs were outsourced from the United States. Currently, some of the most critical jobs like customer care, IT services and solutions, web design and development services, graphic designing services and others are being outsourced. In fact, every possible business processes are being outsourced these days.

Jobs being outsourced are usually those which need to be done on a daily basis. Today the BPO buyer companies are not doing any tasks on their own. They hire consultant companies to impart training to their new recruits. Even the job of carrying out advertisements is being outsourced from an offshore process outsourcing company.

Outsourcing of business processes has become the most preferred strategy for conducting international businesses of today. It is even considered to be the perfect tool for conducting business activities during the period of economic slowdown. Recession is such a situation when the chances of earning sufficient revenue dwindle dramatically. So it becomes very important to cut down costs and save as much money as possible. Here outsourcing stands as the only means to overcome such horrific situation.

Business process outsourcing offers numerous advantages to the overseas corporations. First of all, it enables the foreign companies to lay focus on their core business processes. There are certain non core processes that can even eat up valuable resources and time and this forms to be a major reason why the overseas clients have now decided to outsource their non core processes from a third party firm or consultancy located in third world countries such as China and India.

Companies that are based in Europe or United States can enjoy huge cost benefit from outsourcing their non core jobs from countries like India, China and Philippines. There is no shortage of skilled and cheap manpower in these countries. Despite the fact that they charge much less for their service India, Philippines are known to maintain quality output as per the international standards. This is a major reason why the phenomenon of outsourcing has become famous in these days.

Most of the foreign companies, with a few exceptions, do not charge their clients for online help. By outsourcing these technological calls to India, they save a good amount of money. The Indian Outsourcing Companies generally enter into a deal with these foreign companies for a pre-determined time period and hire people to outsource solutions from India.

Today's BPO firms are offering variety of offshore outsourcing services such as software development services, Telecommunications, IT, insurance, accounting and finance. At present, every possible processes of a business are being outsourced. The sheer joy of getting high work at lower cost drives the overseas corporations to look for more BPO partners in the third world countries. Some of the corporations have even decided to set up their own center in countries offering outsourcing services since this concept has impressed them a lot. It seems clear that the outsourcing industry is growing at a rapid pace and shows enough potential to bloom in future as well.