As we have discussed in previous articles, companies typically opt for outsourcing in HR and IT functions, as also highlighted in Deloitte’s “2021 Global Shared Services and Outsourcing Survey Report.”
In this article, we will look at the types of outsourcing, the sectors driving the outsourcing market, and finally, we will explore a major opportunity of outsourcing that is not always mentioned: internationalization.
- The Different Types of Outsourcing for a Company
- A Look at HR Outsourcing
- A Look at IT Outsourcing
- Company Outsourcing: The Secret to Expanding Business Globally
01.The Different Types of Outsourcing for a Company
There are different forms of business outsourcing, which vary based on the methods and processes being outsourced:
- Business Process Outsourcing (BPO): This involves handing over entire business processes to third parties. An example would be delegating recruitment to a recruiting agency, like Rubik.
- Knowledge Process Outsourcing (KPO): This entails outsourcing complex activities that require specific expertise. An example of this is SEO (Search Engine Optimization), an activity aimed at improving a website’s ranking on search engines.
- Outtasking: This involves assigning an entire project to an external company, which takes responsibility for its execution. This type of outsourcing is common for technical projects, such as managing the transfer of sensitive data, which must be carried out according to strict security protocols and technical requirements.
- Selective Outsourcing: This involves assigning specific technical sub-areas to an external provider, who also assumes responsibility. It is an intermediate solution between outtasking and BPO since it doesn’t involve an entire process but only selected parts of it.
02. A Look at HR Outsourcing
The HR outsourcing market is expected to increase by $13.3 billion between 2023 and 2028. It’s no surprise that HR departments feel overwhelmed nowadays. According to the State of the Workplace Report 2021-2022, 72% of HR professionals believe their workload is excessive and needs to be lightened. Additionally, 42% say they need more dedicated staff to achieve business objectives. Growth is driven by several factors, including the digitalization of HR processes, the growing demand for neo-sourcing, and the need to improve the HR value chain.
One HR outsourcing model becoming increasingly popular, even in Italy, is “body renting”. This is a model in which a company temporarily “rents” human resources, such as professionals and technicians, for specific tasks or short-term projects. Unlike traditional outsourcing, where a company outsources entire processes to an external provider, body renting focuses on providing highly specialized staff who work directly at the client company but retain their contract with the supplier agency.
At Rubik, for example, we offer a body renting service that involves creating a dedicated team for the client, specialized in rare technologies related to IT services and the ICT market. This is all done remotely, without the need for the resource to be physically present in the client’s office, and entirely through IT smart working.
03. A Look at IT Outsourcing
The IT services outsourcing market is also expanding rapidly. According to a Statista survey, nearly 64% of business leaders interviewed said they outsource this activity. Furthermore, IT departments today are increasingly under pressure to manage complex infrastructures, cybersecurity, and digital transformation. Many companies require specialized skills they do not possess to tackle challenges like automation, data management, and cloud implementation.
IT outsourcing companies often have advanced technologies and well-established work methodologies, which can lead to improved quality in IT services, with faster response times and fewer interruptions. External service providers are often at the forefront of the latest technologies and industry trends. Outsourcing IT activities allows companies to benefit from modern innovations and solutions without having to invest heavily in research and development.
04. Company Outsourcing: The Secret to Expanding Business Globally
Outsourcing certain functions, processes, or entire departments allows many companies to expand beyond their national borders, leading to internationalization.
Collaborating with an outsourcing partner with a global presence can further increase return on investment. Outsourcing companies based in developing countries can help reduce costs, extend the reach of partner companies, and provide access to well-paid jobs in less developed areas.
In times of economic uncertainty, outsourcing helps mitigate risks. Instead of investing in new infrastructure or hiring temporary workers, outsourcing activities like hiring, staff management, or building new offices allows companies to avoid financial risks. Even though involving a new partner may seem risky, it ultimately offers more security and enables companies to focus better on their core business.
Additionally, outsourcing offers greater flexibility to technology companies, allowing them to quickly adapt to changes and expand their product offerings. This enables companies to reorganize teams and improve outcomes even during demand downturns.
Finally, outsourcing companies typically provide valuable expertise during challenging times, offering innovative strategies and highly skilled personnel, reducing errors, and ensuring better results for clients and consumers.
Conclusion
In conclusion, outsourcing is proving to be a strategic ally for companies looking to optimize management, reduce costs, and access specialized skills. In both HR and IT sectors, outsourcing offers flexibility and innovation opportunities, enabling companies to focus on their core activities while addressing global market challenges. Additionally, the body renting model is emerging as an effective solution to meet specific needs without the burden of permanent hires. With the added push toward internationalization, companies that adopt outsourcing strategies can not only mitigate economic risks but also position themselves for sustainable growth in today’s competitive landscape.