CBSE Class 11 Commerce Classes What is Outsourcing?
What is Outsourcing : In this article, we are trying to explain an important part of e-business. As our economy, the whole pattern or structure of business has been changed, technology becomes a vital part of it. Outsourcing is an example of utility and necessity of technology in today’s business market. As Takshila Learning provides you CBSE Class 11 Commerce Classes through the online and offline medium. This topic is also explained by an expert. First of all, understand what is Outsourcing?
Outsourcing means contracting out non-core and routine activities to outside agencies with a view to benefitting from their expertise, experience and efficiency. For instance, a firm may outsource the advertising activity to an advertising agency instead of setting up its own advertising department. Such other related services may also be outsourced for better quality and economy.
Outsourcing is referred to as an emerging mode of business because of the following two reasons:
- It is comparatively a new mode of doing business.
- It is continuously evolving. BPO and KPO are gaining popularity.
Nature of Outsourcing:
- Outsourcing involves contracting out some work to other firms.– Many of the business firms are now being entrusted to outside agencies on a contractual basis. e.g., sanitation or housekeeping.
- Non-core activities are generally outsourced – Let us understand the same activity in two different companies which becomes different activity. Sanitation and housekeeping are considered as non-core activities in case of manufacturing firms and so are outsourced. But housekeeping is a core activity for a hotel so is performed in house.
- Business processes may be outsourced to a captive unit or a third party – A big company having many plants may create a separate unit to perform certain common services or functions. Examples: recruitment, selection, training, customer care support services, etc. may be transferred to a separate unit created for this purpose. So such services many be outsourced to external agencies.
- Outsourcing is popularly associated with IT enabled services (ITES) – These are known as BPO. There has been tremendous growth in the number and size of call centres which provide customer oriented voice based services to their clients.
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Business Process Outsourcing (BPO)
Outsourcing is popularly associated with IT enabled services (ITES) is known as BPO. Customer care accounts for the bulk of call centre activities with 24*7 handling of inbound and out-bound activities. The basic feature of BPO is that companies hire out on contract those services which are to be performed on a regular basis.
Scope of BPO
- Customer support services
- Telemarketing services
- Administrative support services
- Customer relations management
- Accounting services
- Human resource management.
Some of the BPO companies of India are Gentpact, IBM Daksh, Wipro BPO, TCS BPO, Aegis etc.
Knowledge Process Outsourcing
The growth of information technology has paved the way for the Knowledge based economy. KPO means outsourcing of knowledge based operations to an independent service providing on a contract basis. A firm may transfer the performance of knowledge related activities to a specialized firm at an agreed amount of consideration. Thus, the firm concentrates on its core activities and have the benefit of performance of knowledge related activities, by the KPO firm. In KPO, the work assigned to a KPO vendor is based on knowledge and information, whereas work assigned in BPO ids basically process-oriented.
Scope of KPO
KPO services include the following:
- Business research services
- Investment research services
- Data analytics
- Market research services
- Valuation and fairness opinions
- Business operations, support, analytics and management
- Legal research services
- Patent research services.
Recorded lectures on Outsourcing, BPO and KPO and other subjects of “CBSE Class 11 Commerce Classes” is available at Takshila Learning.
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