Types Of Outsourcing

Most people have unknowingly mistaken the outsourcing industry for another fancy term for “sweatshops”, which is far from outsourcing services, this mistake in identity harms people’s perception of BPO companies. On the business side, outsourcing is a professional and well-regulated industry that offers its service to companies that intend to be more cost-effective in their staffing solutions. The remote staff being sourced by BPO companies may come from anywhere in the world. With that in mind, being able to source qualified candidates is a huge selling point for outsourcing companies.

Unbeknownst to most Americans, there are 265,679 BPO companies in the United States as of 2022, with most of their facilities located offshore. While there are a thousand more BPO companies located in the Philippines and India, and with countless startup companies emerging all over the world that will compete against US-based BPOs. The truth of the matter is that overseas outsourcing providers are out-competing US-based BPO companies because of their lower costs without sacrificing quality in areas of English proficiency and work ethic.

In fact, there are four types of outsourcing to choose from depending on the needs of their customers like Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO), Recruitment Process Outsourcing (RPO), and Information Technology Outsourcing (ITO). The services they offer may vary from rank and file positions to high-level positions such as blockchain developers, digital marketing directors, financial managers, and country managers which is another term to call general managers in the outsourcing industry. 

Full-Service Business Process Outsourcing (BPO) 

The jack of all trades in the outsourcing industry, without the master of none part, a full-service BPO is the combination of all specialized processes including knowledge processing, recruitment processing, and information technology outsourcing. That in mind makes a full-service BPO company the go-to provider for companies wanting to outsource various processes in their organization from administrative functions to specialized roles that impact business decisions. 

Knowledge Process Outsourcing (KPO) 

Knowledge process outsourcing is the outsourcing of knowledge-intensive information business activities. Put simply, KPO is contracting a professional located offshore to do intensive work at a cost-effective rate, rather than hiring professionals in the US which will surely cost a ton to hire. 

Types of Knowledge Process Outsourcing services:

  • Financial consultants
  • Legal 
  • Medical and healthcare
  • Business management and consultancy
  • Data science
  • Research and development

Recruitment Process Outsourcing (RPO )

RPO is a specific service offered by outsourcing companies. It is a service that offers bespoke solutions or packages for every client’s needs or requests. For example, a client can reach out to a full-service BPO company and provide all of the required information and qualifications for a candidate. Afterward, the BPO service provider will handle the entire recruitment process. After all of that is done, the newly hired candidate will be transferred to the client at an affordable rate. 

Types of Recruitment Process Outsourcing: 

  • Contingency Recruitment – Emphasis on faster recruitment thus sacrificing quality over quantity.
  • Retained Recruitment – Emphasize the quality and expertise of the person to be hired.
  • Contained Recruitment – Combination of Contingency and Retainer Recruitment.
  • Custom Recruitment – This is a customized placement fee prioritizing the number of positions that need to be filled and the client’s available budget is considered.

Information Technology Outsourcing (ITO) 

ITO is a third-party service provider that only specializes in information and technology processes. The outsourcing of IT-related processes has become prevalent among companies worldwide, as a number of them saw the need to reduce cost, access to the best talent, and ease of scaling. 

Types of Information Technology Outsourcing services:

  • Application development
  • Data encoding
  • Software development
  • Automation

The Bottom Line

As research firms predict that the outsourcing industry will continue to grow through the coming decade, Grand View Research’s report about outsourcing states that currently stood at an annual increase of 9.1% from 2022 to 2030. The focus now for businesses that may outsource in the future is which BPO company to choose from onshore, offshore, or nearshore providers. Whatever the case may be, outsourcing providers will handle everything their clients asked them to do at a cost-effective solution.