What is Outsourcing and How Does It Work?
Winston Dalida
Founder at TaskPocket | Elevating Business Growth through Strategic Digital Media and Administrative Support | Podcast Production Partner for B2B Leaders
The Philippines Department of Trade and Industry (DTI) defines Business Process Outsourcing (BPO) as the “delegation of service-type business processes to a third-party service provider.” BPO, or outsourcing, is the business practice of hiring external vendors to perform internal business processes.
Companies worldwide practice outsourcing to save on labor costs and focus on core business functions. It is generally cheaper to outsource to a third-party vendor than hiring an in-house team member, as third-party vendors typically don't need the workspace accommodation that an in-house team member might need. Companies also offload non-core functions like HR and finance to more capable third-party providers, allowing them to focus on core business functions that deliver the most value to their customers.
Outsourcing can include any task, as long as the task can be done virtually or offshore by an assistant. However, the marketplace usually categorizes tasks as either front-office or back-office tasks.
Front-office means that tasks are client-facing, or it involves direct interaction with the customer, e.g., customer support, telemarketing, email management, voice-related tasks, and others. On the other hand, back-office tasks have no direct client interaction, so tasks like general admin, bookkeeping, payroll processing, and other non-voice-related tasks are considered back-office tasks.
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Regardless of its categorization, the vital thing to note is that outsourcing involves?executing a standardized process,?i.e., a standard operating procedure needs to be in place for a third-party vendor to run.
With the pandemic's current disruptions, businesses need to innovate and better manage their operations and resources. Hiring a third-party service provider to take care of certain aspects of your business can help you streamline your operations, increase your bottom line, and help position your company for long-term growth amidst the "new normal."
Winston C. Dalida is the founder of TaskPocket, a virtual assistant agency based in the Philippines. He is dedicated to helping busy entrepreneurs make the most of their time, focus on doing what they love, and become more productive at what they do through the help of virtual assistants.