Outsourcing and ITO: What are they?
Of late, the word ‘outsourcing’ has managed to grab huge attention and popularity. In simple terms, the word defines the process in which a business hands out specific work to a specialized person or organization not directly employed under itself. This process includes the involvement of discrete companies to perform activities like customer support, accounting, resource and facility management, research, marketing, content writing, just to name a few. When a company outsources its Information Technology functions to a different company, it is known as an ITO or IT outsourcing services company.
Why is ITO important?
Information Technology is a booming sector. Today, many businesses rely entirely on Information Technology systems. Naturally, the in-house functions of IT companies are increasing more and so also is the cost associated in carrying them out. ITO helps in minimizing these costs incurred by a company. An IT outsourcing services company can give away functions other than its core activities to a separate company can get rid of a great amount of work load. Moreover, it is a lot cheaper than performing all the task within the company itself, and a bright way of business partnership.
“Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower cost goods and services, causes economic expansion that reduces unemployment, and increases productivity and job creation.” – Larry Elder.
How is ITO performed?
For organizations, businesses and companies planning to outsource their work, there is a range of options. The process is pretty simple – it’s all about smart work and not hard work anymore.
It begins by a certain job from the company being posted on any outsourcing website, explaining the requirements and the nature of work. The next step is to await a contractor’s application for that particular job. An interview session follows next, allowing the company to learn about the contractor’s abilities and the amount of money he’ll be charging. After he is hired, trained and put to work, the final transaction of the payment is made through the same site where the job was posted.
How is outsourcing different from offshoring?
Often, a term called ‘offshoring’ is used in lieu of outsourcing. But, it is hugely different from the latter. Offshoring essentially is the set up of an office or a part of it elsewhere, mostly in a foreign land, to avail the resources of that area. Unlike an IT outsourcing services company, an offshore development centre (ODC) manages the tasks of its parent company on its own, rather than outsourcing them to other companies. Although a nascent concept, owing to its inopportune impact upon the labor market, offshoring has been through a lot of debate in recent times.
A post by Chayanika Deka. 25th of April, 2014.