Types of Offshore Outsourcing Services
In offshore outsourcing, a business tend to transfer some of it works even an operation to a third party in offshore areas so that it may concentrate on its key responsibilities. It is a business activity that is adapted to avail many businesses related benefits like cost benefit, technological development, managerial support or best customer services in offshore areas. To date, the main players of offshore outsourcing include developing countries like Philippines, China, and India.
The most common outsourcing services are:
Business Process Outsourcing (BPO)
Business Process Outsourcing (BPO) is the process of hiring another company to handle business activities. BPO was originally started as outsourcing processes such as payroll. Then it grew to include employee benefits management. Now it encompasses a number of functions that are considered “non-core” to the primary business strategy. Many of these BPO efforts involve offshoring — hiring a company based in another country — to do the work. India is a popular location for BPO activities.
There are two primary types of BPO: back office and front office outsourcing. Typical back office processes that may be outsourced include payroll, billing, logistics and human resources. Some companies offer their services in collections, credit analysis and job recruitment. More than ever, processes that one would never think would be outsourced, such as claims processing at an insurance company, are being outsourced to separate companies. Examples of front office outsourcing include technical support, customer service, marketing and advertising.
Information Technology Outsourcing (ITO)
IT outsourcing involves sub-contracting or “farming out” certain information technology functions to independent, third-party companies or individuals, instead of keeping those functions in-house. An organization would use IT outsourcing for functions ranging from infrastructure to software development, maintenance and support. One of the better reasons for using IT outsourcing is to adapt quickly and affordably to the demands of clients. Information technology outsourcing is used by companies that are limited in being able to handle new or complicated processes. A task may be more efficiently performed by certified IT professionals who can work around the clock to address the more difficult aspects of the project, something it would take months to accomplish with an existing IT team.
Examples of frequently outsourced IT services are application/software development, web development/hosting, application support or management, technical support/help desk, database development/management, telecommunications, and infrastructure.
Offshore Software Development (OSD)
Offshore Software Development (OSD) is a Software Model that emphasizes on global delivery of quality software built by a talented pool of software engineers at an economical cost from a development center that is located in a foreign country. Offshore Software Development is used by companies to control capital costs, reduce labor costs, start new projects quickly, focus on your core business, and reduce risk.
Knowledge Process Outsourcing (KPO)
An offshoot of BPO, knowledge process outsourcing (KPO) is considered by some to be a subset of BPO. KPO includes those activities that require greater skill, knowledge, education and expertise to handle. For example, whereas an insurance company might outsource data entry of its claims forms as part of a BPO initiative, it may also choose to use a KPO service provider to evaluate new insurance applications based on a set of criteria or business rules; this work would require the efforts of a more knowledgeable set of workers than the data entry would.
Knowledge process outsourcing (KPO) is the allocation of relatively high-level tasks to an outside organization or a different group in a different geographic location. Examples of KPO include long-term jobs for intellectual, analytical and knowledgeable people within industries such as research and development, financial consultancy and services, business and technical analysis and many others. In the future, it is envisaged that KPO has a high potential as it is not restricted only to Information Technology (IT) or Information Technology Enabled Services (ITES) sectors, and includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research (Market research KPO), etc.