Outsourcing – What it is And How it Works, Types of Services, and Cases

outsource estimating services
outsource estimating services

Outsourcing appeared relatively recently in the business environment, and it turned out to be very convenient. It would help if you optimized costs in your company. You want to get a professional takeoff estimating services look from the outside. You periodically need to solve specific problems, but it seems that there is no point in hiring a person on an ongoing basis? Outsourcing solves all these tasks.

What is Outsourcing in Simple Words?

In translation, “outer-source-using” means “outside attraction.” Outsourcing is a service that the company actively uses. Still, it is not a direct manufacturer itself. Still, it attracts third-party companies that solve any problems of the customer organization under a previously concluded agreement within the framework of long-term cooperation.

Who is an outsourcer? This is a company or an individual specialist that provides specialized services. Examples of the most common forms of interaction between the customer’s organization and the outsourcer:

  • office cleaning services;
  • catering;
  • IT service;
  • water delivery;
  • accounting.

In simple words, an outsourcing company is a firm/organization that provides highly specialized services based on a contract. An outsourcing agreement is concluded for a period of one year or more.

What an Outsourcing Company Does – Examples

Let’s consider the most typical situations when a company decides to turn to an outsourcer.

Outsource estimation

Situation 1. The volume of services you need is so small that hiring an employee for a permanent job makes no sense.

Situation 2. You periodically need certain services, that is, not all the time. In such cases, it is also easier to attract the performer from the outside.

Situation 3. It happens that a business goes through a difficult period, and circumstances force us to reduce labor costs and taxes for employees.

And a few more examples of when Outsourcing is necessary for you.

Example. The company “Professional workers” from the city of Moscow offers services for the selection of handymen. The arsenal has a large staff of remote workers who are ready to start performing the assigned tasks at any time. All employees have undergone special training and are responsible for their work.

To take advantage of the offer, you must leave a request, and then the manager will contact you and discuss the details of the contract. Within a few days, you will be able to sign a contract and accept a new employee.

It’s essential to know.

In cases similar to the above example, you do not waste the resources of your HR department, and the outsourcing company makes recruitment for you. You also do not calculate salaries, taxes, and pension contributions.

What business area do you do / would like to do?

  • Trade sphere
  • Service
  • Education
  • Own production
  • Real estate transactions
  • Internet business
  • Other

What is the Difference Between Outsourcing and Insourcing, Consulting and Outsource?

Often these concepts are confused, or there is no clear understanding of what refers to what. Let’s try to figure it out.

Insourcing is the organization of work processes within the company, that is, the solution of specific issues by a particular department (legal department, accounting department, logistics department, IT department). The company at any time can decide to transfer any department to Outsourcing.

Outsourcing and Insourcing

Outsource estimating services allows you to transfer organizational processes related to personnel into the hands of a third-party organization. A company can use this service with an existing personnel staff, simply re-registering them for another company, or recruit new employees by agreeing with an intermediary firm. The employees are in the customer’s company. They carry out their work tasks, but the issues of registration, payment of wages, and deduction of taxes fall on the shoulders of the executing company.

Giant companies use this form of cooperation. The number of employees is more than 500 people—for example, media holdings, supermarkets, technology companies. In simple words, out staffing differs from takeoff estimating in that, in the first case, it is not specific services purchased. But the working time of one particular specialist who will work in the organization and fulfill the requirements of the top manager.

What is Not Outsourcing?

Outsourcing is also very often confused with two concepts – freelance and drop shipping. But these are different concepts.

Freelance:

  • Employment type
  • In most cases, work is based on a personal agreement.
  • The level of responsibility is low.

Outsourcing:

  • Service provision form
  • A contract is required
  • The fact of cooperation is officially confirmed with the understanding of full responsibility by both parties

A freelancer can be considered an takeoff estimating only if there is an officially signed contract by both parties.

Dropshipping is a mediation system. Here we are not talking about the provision of services, but about the sale of goods, or rather, the resale for a certain margin.

How do I Migrate to Outsourcing? 5 steps to Implementation

So, you have carefully considered everything and decided to delegate part of the company’s work to an outsourcer. Where to begin? Here’s a step-by-step guide.

Migrate to Outsourcing

Outsourcing Advantages and Disadvantages

But is everything so tremendous and problem-free with Outsourcing estimating company? There are some drawbacks that you should be aware of and be prepared for. I propose to look again at the pros and cons of this cooperation.

Advantages:

  • As we said earlier, this is a significant saving in money, due to the reduction of work processes.
  • Getting quality services without a long search for the best specialist is especially important for newly opened companies.
  • The ability to concentrate on solving the core tasks of companies.
  • Reducing the burden on the accounting department due to the absence of the need to calculate wages, make contributions, etc.

Disadvantages:

  • Inability to control the implementation of the assigned tasks.
  • Decrease in the quality of services provided due to staff turnover or insufficiently trained personnel.
  • An outsourcer may increase the prices of outsourcing services over time.

Conclusion:

What is Outsourcing? In simple words, this is a remote solution to critical organizational processes, which means that it is not necessary today to hire an employee to the company’s staff. It is enough to use an outsourcer who takes care of all organizational issues with the employment of personnel.

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