Scope of Outsourcing

The term outsourcing has more popularly come to be associated with I T enabled services or Business
Process Outsourcing (BPO). We can classify the scope of Outsourcing into 4 major areas.
Financial Services
The firm may outsource various financial services like payroll preparation, Underwriting, Merchant
banking etc.
Advertising
Business firms generally depend on advertising agencies for designing developing and disseminating
their products and services. Under the agreement the advertising agencies agrees to provide all the
services associated with advertisement.
Courier service
Big firms generally depend on the courier agencies to dispatch their large amount of parcels.
Customer support Services
Customer service is the major area where outsourcing applicable. Almost all the companies outsources its
after sale services and customer services. Call centers are the best example for the customer service
outsourcing.

BARRIERS TO OUTSOURCING
1. If it looks too good to be real, it probably is.
Too frequently, outsourcers try to lock clients into long-term deals based on contract terms and pricing
that will be out of date six months later. The inevitable results are frustration, irritation and a lack of
understanding and insight into why the sales promises of outsourcing aren't meeting up with its delivery
realities.
2. Too many outsourcing deals suffer "death by change order."
Service providers may under-quote on purpose, just to get the business. Then, when they get further into
the contract, they may demand more money, citing change of circumstances. When such change orders
occur several times over the course of the relationship, irreparable damage may occur.
3. The prevalent "core vs. context" approach -- that is, outsourcing what's not important to let us
focus on what is important -- is becoming outdated.
Dell Computer was prompted to regain control of its outsourced customer service centers because of the
customer complaints received and the drop in additional sales usually generated by service calls. Procter

& Gamble has now outsourced -- or, more appropriately, cosourced -- its product innovation process to
harness the brainpower of people well outside its organizational walls.
4. The contractual crunch and win-lose contracts have unintended consequences.
Outsourcing has become more difficult to support because the processes are leaner than before, leading
to the "I've-gotta-win-and-you've-gotta-lose" approach to contract negotiation. In the short term, one party
wins and the other loses, but in the long term, everybody loses, because of the animosity, frustration and
bad-mouthing that stem from such a partnership.
5. What you don't know will bite you.
There are many factors service providers don't, or can't, foresee. For instance, some critical workarounds
developed over the years to keep a client's operations running smoothly may not have been properly
documented or formally integrated into the client's core technological framework. These invisibles -- both
manual and automated -- are nearly impossible to identify. Companies often discover them afterward,
when customers complain, when frustration arises on both sides, when the partnership has been
damaged.
6. Outsourcing providers build in a lack of transparency -- the "black box" of costs and margins.
Some may try to hide their overall margins to give themselves more profitability over the life of the
contract. They provide a vast range of consulting services, application development, solution deployment
and project management, all grounded by lots of change orders, into the complex contract. Because
different services have different costs and different margins, a provider can use -- or claim to have used -the ones that offer the most benefit. A client often has few means to oversee what the service provider is
doing and how much it charges.
7. It's easy to underestimate the bull's-eye effect. Lots of stuff has to get done to outsource a
business process.
This stuff ranges from simple things (moving equipment) to difficult things (consolidating computer
applications) to really difficult things (moving and retraining people). More importantly, it all has to come
together just right to hit the target. If one thing goes wrong, it can have a cascading effect on other things.
8. Companies are starting to reject long-term contracts.
Unfortunately, the smaller, shorter-term contracts have their own problems for the client company. Dealing
with more providers inevitably stretches a company's valuable -- and already scarce -- management time.
9. Outsourcing firms are suffering from the Botox Effect.
Botox takes out wrinkles but inhibits normal facial expressions. Around year three to five, outsourcing
service providers are supposed to have eliminated many of the easy processes and added simple
automation. But the technology refresh maybe is a lot more expensive than they thought. And they're
confronting so many operational challenges and cost pressures just to keep going -- or keep the smile on
-- that they can't afford to do the planned investments for the technology refresh.
10. All customers want is a flexible, innovative partner, but they usually get the opposite.
Customers want a flexible outsourcing partner who will introduce innovation into their processes, help
them manage both costs and service and use relevant and emerging technologies. They also want
someone who understands their specific requirements and their business. Unfortunately, outsourcing
service providers tend to fall short in flexible infrastructure, understanding the client's business and
innovation.

In business, the term word sourcing refers to a number of procurement practices, aimed at finding,
evaluating and engaging suppliers of goods andservices:

Outsourcing, the process of contracting a business function to someone else

Insourcing, a process of contracting a business function to someone else to be completed inhouse

Global sourcing, a procurement strategy aimed at exploiting global efficiencies in production

Strategic sourcing, a component of supply chain management, for improving and re-evaluating
purchasing activities

Tradegood sourcing, a process of finding the right suppliers who have gone through the
unique Tradegood "Business done right" verification process by Intertek, the global leading quality
and safety company.

Sourcing (personnel), the practice of recruiting talent using strategic search techniques

Co-sourcing, a type of auditing service

Low-cost country sourcing, a procurement strategy for acquiring materials from countries with
lower labour and production costs in order to cut operating expenses

Corporate sourcing, a supply chain, purchasing/procurement, and inventory function

Second-tier sourcing, a practice of rewarding suppliers for attempting to achieve minority-owned

business spending goals of their customer

Netsourcing, a practice of utilizing an established group of businesses, individuals, or hardware &

software applications to streamline or initiate procurement practices by tapping in to and working
through a third party provider

Inverted Sourcing, a price volatility reduction strategy usually conducted by procurement or

supply-chain person by which the value of an organization's waste-stream is maximized by actively
seeking out the highest price possible from a range of potential buyers exploiting price trends and
other market factors

Remote Insourcing, a practice of contracting a third party vendor to complete a business function
by creating collaborative units between in-house and third party staff

Multisourcing, a strategy that treats a given function, such as IT, as a portfolio of activities, some
of which should be outsourced and others of which should be performed by internal staff.

Crowdsourcing, using an undefined, generally large group of people or community in the form of
an open call to perform a task

In journalism, it can also refer to:

Journalism sourcing, the practice of identifying a person or publication that gives information

Single sourcing, the reuse of content in publishing

In computing, it can refer to:

Open-sourcing, the act of releasing previously proprietary software under an open source/free
software license

Power sourcing equipment, network devices that will provide power in a Power over Ethernet
(PoE) setup

In electronics, it can refer to:

Sinking and Sourcing (electronic circuits, output current capability)