SUBJECT: Outsourcing Lesson #1 - Key Elements Of Outsourcing

{!firstname_fix}

Welcome to the first lesson in the Understanding Outsourcing.

Over the next few days you will receive several lessons that
will help you learn the ins and outs of outsourcing and how it
can help your business productivity.

In this first lesson let's talk a little about what outsourcing
is, how it works and what it can do for your business. We will
examine some of the key elements of outsourcing to help you
develop a better understanding of the concept of outsourcing.

Outsourcing is a term that has received a great deal of
attention lately. Despite the increasing trend in businesses
relying on outsourcing there are still some who don't clearly
understand what the term actually means.

What is outsourcing?

This is the most common question that many people have about the
subject of outsourcing. Before you can dive into the more
complex aspects of this business strategy it is important to
have a basic understanding of the process.

In the simplest form outsourcing is when a company delegates the
completion of certain tasks to an individual not employed
directly by the company. This individual may be an independent
contractor or an employee of another company who is
subcontracted to complete these tasks. In exchange for the
individual’s services, he or his company receives monetary
compensation.

This description of outsourcing makes it far easier to
understand the concept. Most people incorrectly assume
outsourcing only applies to situations where large corporations
have products manufactured overseas by a subsidiary and don’t
realize examples of outsourcing can be seen just about
everywhere in corporate America.

Domestic outsourcing refers to outsourcing where both the
primary company and the independent contractor or subsidiary are
located in the same country. One of the main reasons for
outsourcing is to reduce costs but it is not always necessary to
outsource work overseas to reduce costs. Cost savings will be
discussed in greater detail in the section on the benefits of
outsourcing but essentially outsourcing results in a savings as
a result of a reduction of labor costs.

Overseas outsourcing is the type of outsourcing most people
already understand. This is where large corporations such as
Nike, and even some smaller companies, employ manufacturing
plants overseas in third world countries to upsize their
profits. This is significant because their costs including
wages, materials and building lease would be considerably higher
in the United States than they are in these other countries.

Now that you have a clearer understanding of the concept of
outsourcing let's go over some of the main benefits of
outsourcing.

You may still be wondering why companies would go to the trouble
of outsourcing certain tasks. Outsourcing is popular because
there are a great deal of benefits to the companies who
outsource the work. Some of the benefits include:

- Reduced labor costs - Reduced workload - Increased workforce -
Greater flexibility

One of the main reasons companies resort to outsourcing is it
can significantly reduce costs. In the case of overseas
outsourcing of manufacturing tasks, costs can be cut
dramatically because there are lower wages and costs associated
with managing and maintaining the manufacturing plants.

However, companies also enjoy a cost savings when they outsource
tasks domestically. Reduction of labor costs is the primary
source of savings in this case. Independent contractors hired on
a contract basis for the purpose of completing specific tasks
are often not given benefits such as social security, Medicare
and workers compensation.

Another benefit of outsourcing is enjoying a larger workforce
and a reduced workload, without actually hiring additional
employees. Businesses who maintain networking relationships with
qualified individuals have more opportunities open to them
because they are able to rely on these individuals to assist
them if they acquire large or complicated projects.

Finally, outsourcing gives a company a great deal of
flexibility. Companies who have a significant workload and
backlog of work where the majority of the employees are highly
utilized might be hesitant to compete for new work because they
do not have a great deal of employee availability. However, with
a network of individuals to rely on if the need to outsource
arises, the company has more flexibility in pursuing new work.

We have a lot to go over in the next few days if you want to
develop a firm understanding of how outsourcing works and how
you can use it for your own business, but before we close this
lesson I want to leave you with a list of the top reasons why
you should consider outsourcing your business:

- You can take up more work from a better range of clients
because you have an army of people working with you.

- You can get diversity in your team. When you find different
outsourcing professionals, you find that these people are of
different qualifications and skill-sets, which means you can
even take up work which you were initially avoiding because of
your own limitations.

- You can't handle all the tasks related with a business alone.
There will be several things you are not very conversant with
and things that you don’t like doing. If that is the case, you
might find outsourcing to be a great option to accomplish these
tasks adequately.

- Outsourcing definitely helps you meet deadlines on time.

- For some people, outsourcing is also a means of reducing
costs. If a particular service is expensive in your part of the
world, you could find a professional from another part of the
world where that particular service is cheaper.

Make sure you look for your next lesson soon. We will be talking
more about the advantages of using outsourcing.
 

To Your Success,
YOUR NAME
YOUR LINK