Emerging Modes of Business
Outsourcing refers to long term contracting out of non-core and sometimes core activities to captive or third party specialists with a view to benefit from their experience, expertise, efficiency & investment. Companies contracting out and appointing the specialists are known as Outsourcer. Specialists to whom the contract has been given are known as Outsourced. Outsourcing involves contracting out, outsourcing of non core business activities and outsourcing of process to a captive unit or a third party. Contracting out involves entrusting outside agencies to perform the activities for the organisation on a contractual basis. Types of outsourcing service partners are Captive service providers which involves units providing services to the parent company only and third party service providers which involves units operating independently in the market & providing services to other firms too. Third party service providers can be vertical which specialises in 1 or 2 industries & scale up in doing a number of processes or horizontal which specialise in one industry and provide services to wide base of clients, cutting across industries.. Some of the benefits of outsourcing are focusing of attention, improved accountability, latest technology, cost reduction etc.
Some of the services covered under outsourcing activities are finance and accounting, transaction processing, merchant banking, customer support services etc.
BPO stands for Business Process Outsourcing and involves repeatable processes which involves quick learning. KPO stands for Knowledge Process Outsourcing and involves non- repeatable processes which require regular learning. Outsourcing of some popular services are financial services, advertising, courier services and customer support services.