subject: Why outsource business processes? [print this page] In the modern business world, many companies choose to outsource some or even most of their internal processes to an external provider. Typical examples of this practice include recruitment process outsourcing, where an outside company takes over a company's staffing process, or payroll process outsourcing - where an external firm will handle payroll administration, time and attendance reporting and so forth.
Originally, this kind of relationship was associated almost exclusively with the manufacturing sector where the practice of outsourcing processes began with the supply chain. However in the contemporary business world nearly every kind of business will take advantage of this arrangement to a greater or lesser degree.
Today, business process outsourcing is divided into two broad areas depending on the function in question. There's back office outsourcing, where internal functions such as those previously mentioned (and many others) are outsourced; then there's front office outsourcing, which describes when an external party handles customer-facing services. This type of outsourcing is most typically seen in call centres and answering services.
Outsourcing these processes can bring several advantages to the client company. Chief among these advantages is the extra flexibility it gives in terms of costs, as by outsourcing the service a company can transform fixed costs of maintaining internal infrastructure and staff to variable costs that can be scaled to demand and necessity. This can be a major help when dealing with changes in capacity and can reduce response times significantly.
Furthermore, business process outsourcing can help a company remove the distractions from its core business model and leave it to focus on its in-house competencies, simply by removing the burdens of bureaucracy to another party. This means that key employees such as senior staff don't have to be distracted by non-core processes such as administration and can also reduce the stain on internal systems such as IT or communications.
