Outsourcing Definition - What is Outsourcing - Shopify

Outsourcing occurs when a business pays an outside supplier to provide goods and services, rather than doing the work in-house. The practice started in the ... Emailaddress Password Yourstorename Createyourstore OpensinanewwindowOpensanexternalsiteOpensanexternalsiteinanewwindow Businessencyclopedia Learneverythingthereistoknowaboutrunning a business SearchSearch Outsourcing 1minuteread Email Twitter Facebook Pinterest LinkedIn WhatisOutsourcing? Outsourcingoccurswhenabusinesspaysanoutsidesuppliertoprovidegoodsandservices,ratherthandoingtheworkin-house.Thepracticestartedinthe1970sandgrewpopularinthe1990sasawayforcompaniestoreducetheirinternalcoststructure. Theglobaloutsourcingmarketamountedto$88.9billionin2015,whichwasdownconsiderablyfromthe$104.6billionspentin2014,accordingtoStatista.India,China,andMalaysiaarethetopthreecountriestowhichcompaniesoutsource.Butthatdoesn’tmeancompanieshavetosendbusinessoutsidetheU.S.–outsourcingreferssimplytohavingworkdonebyanon-employeeofyourbusiness. Perhapsthemostcommonlyoutsourcedserviceasofthe2010sistelephonecustomerservice,whichmajorcorporationsoutsourcedtocompaniesinIndiabecausethecostwasafractionofwhatAmericancompaniescharged.Butoutsourcingcanoccuronasmallerscale,too. Don’twanttohireafull-timepublicrelations(PR)manager?TurnyourPRworkovertoanindependentcontractororPRfirmthatispaidbasedontheworkcompleted.Hatetheliabilityofhavingemployeesdodeliveriestocustomers?Hirealocaldeliveryfirmtodoitforyou. Onalargerscale,adressdesignermightoutsourcebeltmanufacturingacompanythatspecializesinleather.Anelectronicsmanufacturermightoutsourcetheassemblyofsomeofitspartstoanothercompany. ToOutsourceornottoOutsource Outsourcingonlymakessensewhenthecosttobuygoodsorservicesfromanoutsidevendorismuchlowerthanthecosttodelivertheserviceormanufacturetheproductin-house.However,manycompanieshavediscoveredthatcostisnottheonlyconsiderationwhenevaluatingoutsourcingasastrategy. Whilemanyoverseasvendorscandeliverlower-costgoods,theyarenotalwaysatthesamequalitylevel.Someonlineretailersthathaveoutsourcedtechnicalsupporttonon-English-speakingcountrieshavediscoveredtheircustomershavedifficultycommunicatingwiththephoneoperators,creatingdissatisfactiontheretailershadn’tanticipated.Consequently,somebusinessesareshiftingworkbacktotheU.S.,despitethehighercosts. Outsourcing’sDisadvantages Whileoutsourcingcanbeasmartwaytoreduceinternalexpenses,therearepotentialdownsides,too.Byshiftingresponsibilityforpartsofyouroperationtoothercompanies,yourhumanresourcecapabilitieswillbecomemorelimited.Thatis,you’llhavemorespecialiststhangeneralistsonstaff.Thiswillmakeitmorechallengingtoremainflexibleifthemarketshifts.Italsodampenscreativity. Notonlythat,butoutsourcingcanwreakhavoconyourproductionifsomethingcatastrophichappensatyourvendor’slocation.Forthatreason,it’sbestnottobecometooreliantonanyonevendor.Andkeepingcoreaspectsofyourbusinessin-housecanhelpprotectyoufromdisruption. Join446,005entrepreneurswhoalreadyhaveaheadstart.Getfreeonlinemarketingtipsandresourcesdelivereddirectlytoyourinbox.EmailaddressGetupdatesNocharge.Unsubscribeanytime. Thanksforsubscribing. You’llstartreceivingfreetipsandresourcessoon.Inthemeantime,startbuildingyourstorewithafree14-daytrialofShopify. Youmayalsobeinterestedin: WordofMouthMarketing SoleProprietorship PressRelease Manufacturing PrivateLabel Retail ConversationalCommerce DistributionChannel ResearchandDevelopment(R&D) Join446,005entrepreneurswhoalreadyhaveaheadstart.Getfreeonlinemarketingtipsandresourcesdelivereddirectlytoyourinbox.EmailaddressGetupdatesNocharge.Unsubscribeanytime. Thanksforsubscribing. You’llstartreceivingfreetipsandresourcessoon.Inthemeantime,startbuildingyourstorewithafree14-daytrialofShopify. Resources WhatisShopify? LearnmoreabouttheShopifyplatform Howtostartanonlinestore Step-by-stepguideforstartingup Bestecommerceplatforms Findtherighttoolandstartselling Smallbusinessideas Discoverprofitablebusinessideastoday Howtomakemoneyonline Practicaladviceforearningasideincome Introductiontodropshipping Startmakingsaleswithoutinventory Introductiontoprintondemand Addcustomdesignstopopularproducts Startyour14-dayfreetrialtoday! EmailaddressStartfreetrialTryShopifyfreefor14days,nocreditcard required.Byenteringyouremail,youagreetoreceivemarketingemails from Shopify.