Offshoring – What Does It All Mean? Part 2 – Outsourcing

Outsourcing has become a popular option for businesses looking to use international talent without assuming too much risk or commitment.  Outsourcing (Business Process Outsourcing or BPO for short) refers to the process of engaging a third party (outsourcing company) to perform your business processes such as back office support, accounting, software development or similar, rather than hiring in-house.  Because of the wide range of processes that are able to be offshored, you can find a wide variety of industry-specific outsourcing companies to pick from.  For many businesses, Outsourcing (or Offshore Outsourcing) has allowed them to access highly qualified and experienced people throughout the world without increasing headcount or taking on the added responsibility of management.  Depending on your needs, Outsourcing might be a good option when growing your business.

Outsourcing – take advantage of the skill sets of professionals.

Let me give you an example of how outsourcing works.  Say you engage a software development BPO to build you a specific application.  You give them an understanding of your needs and agree on the timeframe, deliverables and budget.  Once agreed, the BPO will get their team of highly qualified and experienced software developers to create your work to spec, to budget and to time.  Chances are the developers working on your project have worked on similar in the past, and know the technology and processes as well as anyone.  By outsourcing the development (a skill set you or your team don’t have) to specialists, you may be able to take advantage of a highly experienced workforce without the outlay of permanent hiring and concentrate on what you do best.  However, it’s important to remember your agreement with the BPO is for the delivery of your product – how they do it and who they do it with is up to them – not you.  This means the BPO controls the entire process of development, including hiring, development, QA, and support.  It’s not uncommon for BPO staff to be working on multiple projects or accounts at any one time, and businesses engaging a BPO have not control over who does their work.  If control of IP, product development or QA is more important than the delivery, Outsourcing may not be the right model for you..

When engaging a BPO, it’s important to be clear about your expectations, deliverables, budget, timing and support expectations.  For generic business processes that don’t require specific knowledge of your organisation, this may be a good solution for you.  If the uncertainty is a concern, consider Offshore Staffing or Incorporation as a better option.


  • Lower labour costs and operational expenses by engaging a third party.
  • Access to highly experienced professionals in their field.
  • Reduced management needs and internal resource usage.


  • Reduced control – The BPO is responsible for hiring, management, development, QA, delivery and support.  Is this something you are willing to have someone else responsible for?
  • BPO focus – you’re not the BPOs only client.  Will the BPO prioritise your project over their other clients?
  • Lack of consistency – if you require staff reliability & familiarity, the lack of staff consistency may become an issue.  You have no say in who is engaged in your work.

Like Freelancing, Outsourcing is a great way to access highly experienced professionals without outlaying huge amounts of risk or cost.  If you’re comfortable with relinquishing control of staffing, processes, QA and support, and are looking for a third party to take responsibility, Outsourcing is a fantastic option.  If you want to keep control of your business processes while taking advantage of offshore talent, I’d recommend Offshore Staffing or Incorporation – topics I’ll write about in the next posts.


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