Four types of outsourcing

Posted by anthony on February 2, 2009

Outsourcing is becoming more and more popular in today’s business environment. Most companies tend to outsource some of their work functions. It is a process in which the company or individual business man contracts another company to avail particular services. There are four basic types of outsourcing, wherein the categorization is based on the nature of work being outsourced.

The first type is Business Process Outsourcing (BPO) in which call center outsourcing, human resources outsourcing (HRO), finance and accounting outsourcing and claims processing outsourcing belong. The second is Information Technology Outsourcing (ITO). It includes IT services, technical support, software testing, and website management outsourcing. The third type is Software R&D or also known as software development outsourcing. Finally, Knowledge Process Outsourcing (KPO), is the type of outsourcing that includes reading X-Rays, performing investment research on stocks and bonds, handling the accounting functions for a business or executing engineering design project.

By looking at the benefits of Outsourcing, we can deduce that it is indeed helpful and a practical choice because of its cost-effectivity. You can gain access to knowledge pool that is not available inside your own company. You can also attain flexible capacity management in which you are enabled to flexibly manage the production capacity and staff as well. The Time Zone coverage that are set up 24/7/365 operation makes your business operation more efficient.