Outsourcing is an abbreviation of the English words outside-using-resourcing, which means the use of external resources. The primary goal of outsourcing is to delegate tasks, projects, and processes to an external company, most often specialized in a particular area. Cooperating companies build lasting relationships and work on a partnership basis. E-business entrepreneurs are often forced to use outsourcing in practice to stay competitive in relation to market conditions and to respond effectively to customer needs.
History of Outsourcing
In the beginning, outsourcing was a strategy for manufacturing companies, especially in the automotive industry. Many routine tasks were outsourced to the outside world, reducing costs, improving the quality of work, or facilitating specialization in specific areas. The phenomenon of outsourcing appeared in the United States in the 1970s and focused only on technical issues. At that time, it was realized that no company was able to carry out all tasks perfectly, so it is important to focus on aspects related to the specialization of the company and outsource the remaining work to an external company. Today outsourcing is widely used and is not limited to technical activities.
What Allows Outsourcing?
- Reduction of Operational Costs
- Specialising the company in a particular field
- Improving the Quality of Service Provided
- Dividing risk among various companies
- Finding a way to perform high-level tasks that do not involve business specialization
- Eliminate the costs that would have been incurred if the company had performed activities outside of its business profile.
What Opportunities does Outsourcing IT Create?
IT outsourcing opens the door to the use of new technologies without the financial backing of expensive hardware or software. Relinquishing time and money involved in the deployment of new technologies – tasks will be carried out by high-end IT professionals from outside companies. IT outsourcing mostly involves data processing, development of dedicated applications, hiring developers, or servicing computer hardware.
Outsourcing IT and Risks Associated with it
- Become dependent on a particular supplier
- Possibility of disagreement between the customer and the service provider
- Conflicts e.g. financial between partner companies
- The risk of hiring an unprofessional supplier
- No cost reduction expected
- Loss of control over the activities commissioned.
Outsourcing in the E-Commerce Segment
The growing importance of the Internet means that more and more companies want to be online. Statistics show that customers love shopping online – more than half do online shopping. For this reason, even those who have traditionally operated only traditional retail outlets have decided to set up their own online store, including: drugstores (e.g. Rossmann), clothing stores (e.g. Reserved) and even grocery stores (e.g. Tesco). The e-commerce sector is still growing, achieving amazing results – up 20% annually! It is worth noting that creating and running an online store is a very complex process. Thanks to this, IT outsourcing is currently experiencing its expansion. Not only do companies choose to create their virtual business cards – web pages, but they also choose to outsource e-commerce activities. In 2001, even Hewlett-Packard together with Super Media created a joint project that involved the implementation of e-commerce systems in the outsourcing model for medium and large enterprises.
What Elements Make Up the Activities Related to the Introduction of the E-Commerce Channel
At the very beginning, we should focus on choosing the best solution (specific to our industry and scale of operations) and launching an e-commerce platform. Then you should take care of the preparation of good sales descriptions of our products and photos. It is also worth adding a recommendation system that will make it easier for customers to select and evaluate our products. The last element is to include additional applications, very frequent mobile m-commerce. After preparing our trading platform, you should take care of potential customers. For the purpose of this task is best suited to Internet marketing, i.e. promoting the site in search engines, on other websites or preparing newsletters for customers. Keep in mind that it is important to keep track of customer feedback and behavior, as well as systematically optimize your ecommerce platform.
One Stop E-commerce – The synergy effect
In order for our platform to gain a competitive advantage and, as a result, profitability, it should offer products and services of the highest quality and in addition have full control over operational processes. Our platform must be integrated with logistics, accounting and customer service. It is therefore a priority to entrust one partner with IT and logistic or financial operations. The advantage of having one partner, who himself supports complex processes is coordination, communication between the parties and to ensure full integration. This gives us the synergy effect, in this case, the multiplied profits. If the company decided to outsource each component, properly coordinated co-operation between partners could be a pain in the back.
How to Choose an IT Service provider?
Every company taking into account the choice of outsourcing solutions should know precisely the principles of its operation and the advantages and disadvantages of outsourcing. One of the most important issues is the choice of an external partner – in this case you should not be guided solely by financial aspects but above all by its reputation. All decisions need to be rethought, do not rush to sign the contract or choose an outside company.