When a business hires out certain services rather than completing them in-house, this is referred to as outsourcing. Outsourcing is becoming more and more popular in modern businesses. The types of outsourcing can be broken down into five main categories: knowledge process, business process, information technology, legal, and engineering process. Here is a look at each one.
Knowledge Process Outsourcing
Knowledge process outsourcing (KPO) is when a company hires an outsourcing company to do research. Information gathering, intellectual property research, equity research, training, research and development are just a few of the reasons that a firm may utilize KPO. This type of outsourcing reduces costs and can make up for a lack of skilled employees. It also allows the company to focus on other aspects of their business.
Business Process Outsourcing
Business process outsourcing (BPO) is when a business hires an outsourcing company to handle services such as payroll, marketing, insurance, health management, and more. BPO is a cost-saving measure to save the company money in the long run. It’s also much easier to hire a business that focuses on providing BPO services than to find a skilled employee to do the work instead. This search would cost time and money that a business may not have.
Business process outsourcing is also one of the riskiest outsourcing projects a company may take because it’s closely linked with business security. It can be tough to maintain what data passes when there are other companies involved, which may lead to a leak of information, especially if the outsourcing is international.
Information Technology Outsourcing
Information technology outsourcing (ITO) is closely linked to BPO. Many services that may fall under business process outsourcing can be completed by an ITO company as well. This type of outsourcing is used when a business needs to hire an outsourcing company to take care of any technology and computer work. ITO encompasses things such as programming, website design, networking, and more.
Businesses may hire both ITO and BPO providers. The difference between the two is that a business process outsourcing firm will focus on the business aspect of the service and how companies can make financial gains. ITO professionals work on providing support for the technological side of business, such as how to get a network up and running when it goes down. ITO services are not usually long term whereas BPO may be.
Legal Outsourcing
Legal outsourcing may also be referred to as legal process outsourcing (LPO). This type of outsourcing is used when a company needs assistance with legal matters. A business may hire an LPO professional if it needs legal support. LPO is often used to save money for a company, as most will not have an in-house legal team. It makes much more sense for some businesses to hire an outsourced attorney to consult on legal matters rather than paying an attorney in-house who may only work occasionally.
Engineering Process Outsourcing
Engineering process outsourcing (EPO) is often used during the building stage of many companies. An EPO professional can be an architect, general contractor, surveyor, electrical engineer, and so much more. This service supports a company with all of their architecture, engineering, and construction needs.
