Outsourcing is contracting part of a company's manufacturing or operations to another company rather than handling them in-house.

Outsourcing is not necessarily offshoring. Jobs may be outsourced to local companies that have a particular expertise. They also can be outsourced to another state where wages are lower or regulations more business-friendly.

Key Takeaways

  • Jobs may be outsourced if they are outside the core competency of the company.
  • Contracting on a per-project basis works well for companies with seasonal requirements for products like marketing brochures.
  • Call center functions require plenty of infrastructure and staff. Many companies prefer to outsource them.

The outsourcing trend is growing as companies find it is cheaper and more efficient to contract out all but the primary focus of their businesses.

Manufacturing

This is where outsourcing began in earnest and it remains the ultimate example, and the most extreme. A few generations ago, a company's factory could usually be found attached to its main offices. Now, many companies contract out their production to companies that are located in a region or a country where cheaper labor can be found.

Some companies outsource one or more components of their products to be manufactured elsewhere and then have it shipped closer to home for assembly. Others contract out the entire product and don't operate a single factory of their own.

Call Centers

Dialing an 800 number today can and often does connect you to someone on the other side of the country, or the world.

Considering the infrastructure and employee headcount required to accommodate large volumes of telephone calls, it's no surprise that many companies outsource surveys, promotional calls, and product support.

Not all of those call centers are overseas, though. There are limits on the number of contractors available in English-speaking countries. This is why your call may connect you to a business-friendly location within the U.S.

Writing

The term freelance describes a professional who is not a regular employee of any company but provides services on a contractual basis.

Freelance writers are now commonly used to create marketing materials, advertising blurbs, and public relations copy.

Outsourcing doesn't necessarily mean off-shoring.

Even universities are finding it more economical to line up writers who will work occasionally on a contract basis rather than full-time as permanent staff.

Graphic Design

Like freelance writers, graphic designers are now often hired on a per-project basis.

The system works best for companies that have only an occasional need for graphic design services and don't want to maintain a full-time design staff. Most companies not in the publishing industries tend to have cyclical and short-term needs for professional graphic designers.

Information Technology Support (IT)

Help-desk agents and support staff are indeed often found offsite if not offshore.

Some of us may still long for home visits, but most of us rely on phone help, and that's likely to be far from home. Since the support staff can easily access your computer remotely, it works just as well.

Security

In these anxious times, security guards are absolutely everywhere – the mall, the bank, schools, concert halls, and night clubs. Gated communities with guards in front are increasingly popular. Few of these security guards are employed by the company or the community they're guarding. They work for private security firms who know how to recruit, train, support, and supervise them.

The Ideal Outsourced Job

Typically these jobs require people who are highly skilled or highly trained, or both, but they're doing a job that is outside the core business of the companies that employ them.

The companies that contract for their services are giving up some degree of control over a function or a product, but they're handing it over to someone who specializes in exactly that.