Outsourcing and Third Party Companies Essay

Outsourcing and Third Party Companies Essay

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Outsourcing relates to a firm contracting with another firm to provide products or services which could otherwise be made in-house. The contracted third party company takes control of the work and it is accountable for the success of the work assigned. Many organizations today outsource services such as electronic mail services, payroll, and customer care call center services. A firm contracts with a company that has specialized in production or provision of a given service, where in many cases the company is located overseas. Having looked at what is all about outsourcing it is important to note that; a business outsources a job that it considers not to be the core business of the company. An insurance company for instance outsources its landscaping operations to companies that are experts and specialists in that job. The service providers where jobs are outsourced are referred to as third parties (Sourcingmag.com 2011).
To help an organization make outsourcing decision, it should ask the following questions; after outsourcing, will the company be free to concentrate on its core activity? Will the company’s efficiency be achieved when the organization outsources? Will outsourcing help the company gain a competitive position? Among other strategic concerns (Crown 2011).
Outsourcing takes place in different firms and the most common include, outsourcing of information technology (ITO), outsourcing of business processes (BPO), which encompasses outsourcing of human resource (HRO). ITO is where a business firm outsources services of computer technology from a third party company. BPO encompasses HRO which relates to outsourcing of customer care call centers services from a third party instead of doing it on its own.
Companies out...

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MDF Systems, 2004. 32 Benefits of Outsourcing.
Retrieved from: http://www.mdfsystems.com/artman/publish/article_19.shtml
Onwards Vortex Centrum Limited and Group companies, 2011. Outsourcing: Qantas in seven
year deal with IBM. Retrieved from: http://chiefofficers.net
Qantas Airways Limited, 2011. Our Company. Retrieved from:
QuinStreet Inc., 2011. IBM Puts Qantas' IT Business in its Pouch.
Retrieved from: http://www.internetnews.com/xSP/article.php/3354841/IBM-Puts-Qantas-IT-Business-in-its-Pouch.htm
Sourcingmag.com, 2011. Outsourcing - What is Outsourcing?
Retrieved from: http://www.sourcingmag.com/content/what_is_outsourcing.asp
UBM TechWeb, 2011. Airline Taps IBM for Flexible Pricing Deal.
Retrieved from: http://www.informationweek.com/news/20900330

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