Outsourcing

What is outsourcing?

Outsourcing, Subcontracting is the link that a contractor contracts with third companies or external persons to delegate the execution of a certain responsibility or activity.

This concept arises from the need for organizations to reduce costs and focus their activities on tasks that really generate added value to the product or service they provide.

Subcontracting is also commonly known as outsourcing or outsourcing and encompasses activities of all kinds, for example,

accounting tasks,  human resources  (personnel selection),  marketing, and the manufacture of certain parts for a final product, among others.

Characteristics of outsourcing

The main characteristics of outsourcing are listed below:

• The duration of the contract depends on the activities to be carried out or the characteristics of the project 
• It is carried out by two entities: the organization that contracts and the organization that is subcontracted. 
• It saves costs and accelerates the growth of the organization. 
• It is used to contract activities that are not the main activities of the organization.
• Good communication between both parties is important. 
• It is employed in labor camps. 
• It involves some type of remuneration that is stipulated in the contract.

Advantages and disadvantages of outsourcing

advantages

The main advantages of outsourcing are the following:

• In many cases, workload and workspace are avoided.
• Avoid the accumulation of unnecessary fixed costs in organizations. 
• It allows the company to focus on vital activities that have greater added value for its business. 
• It is expert help from another organization without further commitment.

Disadvantages

The main disadvantages of outsourcing are the following:

• Failure to establish the necessary controls can affect the quality control process.
• There is a risk that the subcontracted company does not provide a good service and generates a bad image for the name of the organization that hires it.
• It does not make room for a sense of belonging, since there is no type of commitment or link between the organizations.
• Care must be taken with the information provided to other organizations, as confidentiality may be affected .
• Clearly establishing the functions or obligations of each of the parties requires time.

examples of outsourcing

Here are some examples of subcontracting:

• A company decides to outsource the cleaning and maintenance service of its office to another organization.
• A computer development consultancy needs to incorporate workers, so it hires another human resources consultancy for the search and selection of personnel.
• A biscuit factory decides to hire a company that is in charge of the logistics and distribution of its product, so it outsources said work.
• A merchandise distribution company was hired by an independent individual who sells carpentry products.
• A company in charge of carrying out masonry work decided to subcontract a consultant in order to provide the appropriate service to one of its clients.