Outsourcing: How It Works in Business, With Examples

why do companies outsource

In turn, higher-skilled manufacturing jobs, involving robotics or precision machines, have emerged at a greater scale. In 2023, a Deloitte survey found that India, Poland, and Mexico were the top countries for outsourcing shared services. Meanwhile, outsourcing IT service desk functions was the top service exported in the information technology sector globally.

why do companies outsource

Op-Ed: Global trade wars, protectionism, and it’s all gonna cost you big time

Outsourcing is the practice of hiring a party outside a company to perform services or create goods. In some cases, these were traditionally performed in-house by the company’s own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure or a strategic management tool. As such, it can affect a wide range of jobs, from customer support to manufacturing to the back office. One illustrative example of outsourcing’s impact can be observed in the IT sector.

When a company uses outsourcing, it enlists the help of outside organizations not affiliated with the company to complete certain tasks. The outside organizations typically set up different compensation structures with their employees than the ones used by the outsourcing company, enabling those organizations to complete the work for less money. This ultimately enables the company that chose to outsource to lower its labor costs through the combination of less pay and fewer benefits. Outsourcing was increasingly used as a business strategy in the 1990s, when multinationals used third-parties for logistics and manufacturing functions, along with others.

The Future Of Outsourcing—And How To Outsource The Right Way

By outsourcing non-core functions, companies can significantly reduce their operational expenses. For instance, hiring in-house teams for IT support, customer service, or accounting often involves substantial costs, including salaries, benefits, office space, and equipment. Outsourcing these tasks to specialized firms or freelancers allows companies to leverage global talent at a fraction of the what is time and a half and how to get it right cost. Outsourcing offers cost savings, access to specialized expertise, and increased efficiency. It allows businesses to focus on core activities, scale operations quickly, and improve flexibility.

Web Development

A service level agreement (SLA) is one lever for navigating this conflict — when implemented correctly. An SLA is a contract between an IT services provider and a customer that specifies, usually in measurable terms, what services the vendor will furnish. Service levels are determined at the beginning of any outsourcing relationship and are used to measure and monitor a supplier’s performance.

How Business Process Outsourcing Works

The truth is your business may not need the same level of staffing year-round. Your business can staff up before a busy season without the financial commitment of hiring in-house employees, the cost of which can take years to break even on. After you’ve made it through a busy season, you can easily switch back to an entirely in-house team.

  1. GitHub chose to outsource the development of its Atom text editor, which allowed the company to expand its features without diverting resources from its main services.
  2. The chosen partners in the supply chain can make or break a company’s legal and moral standing.
  3. Call centers often work with customers to ensure they have the best experience with company services or products.
  4. In 2016, the global outsourcing market size was valued at 76.9 billion U.S. dollars.
  5. That communication may not take place as fluidly, creating breakdowns in information flow that could hinder marketing’s ability to deliver what audiences need.

But offshoring is a subset of outsourcing wherein a company outsources services to a third party in a country other than the one in which the client company is based, typically to take advantage of lower labor costs. This subject continues to be charged politically because offshore outsourcing is more likely to result in layoffs. The appropriate model for an IT service is determined by the service provided. Most outsourcing contracts have been billed on a time and materials or fixed price basis.

With years of experience, he effortlessly manages the intricacies of back office operations. Ryan’s proficiency spans diverse industries, consistently providing valuable insights and efficient solutions. He excels in streamlining processes, promoting seamless collaboration, and optimizing productivity. As a prominent writer in the back office domain, Ryan delivers concise and practical advice, empowering businesses to thrive efficiently. In today’s dynamic business landscape, companies of all sizes are constantly seeking innovative strategies to enhance their efficiency, minimize costs, and stay ahead of the competition.

Although the process is the same, business process outsourcing is sometimes referred to as managed services. Because we live in a 24/7-on world, the greatest customer satisfaction is often achieved with a constant presence to support them. Many small businesses do not have the time, resources or funds to support customers 24/7. In addition to the constant demand for customer support, many companies don’t have the talent to meet other customer needs, like multilingual support.

Posted: August 9, 2024 4:24 pm


According to Agung Rai

“The concept of taksu is important to the Balinese, in fact to any artist. I do not think one can simply plan to paint a beautiful painting, a perfect painting.”

The issue of taksu is also one of honesty, for the artist and the viewer. An artist will follow his heart or instinct, and will not care what other people think. A painting that has a magic does not need to be elaborated upon, the painting alone speaks.

A work of art that is difficult to describe in words has to be seen with the eyes and a heart that is open and not influenced by the name of the painter. In this honesty, there is a purity in the connection between the viewer and the viewed.

As a through discussion of Balinese and Indonesian arts is beyond the scope of this catalogue, the reader is referred to the books listed in the bibliography. The following descriptions of painters styles are intended as a brief introduction to the paintings in the catalogue, which were selected using several criteria. Each is what Agung Rai considers to be an exceptional work by a particular artist, is a singular example of a given period, school or style, and contributes to a broader understanding of the development of Balinese and Indonesian paintng. The Pita Maha artist society was established in 1936 by Cokorda Gde Agung Sukawati, a royal patron of the arts in Ubud, and two European artists, the Dutch painter Rudolf Bonnet, and Walter Spies, a German. The society’s stated purpose was to support artists and craftsmen work in various media and style, who were encouraged to experiment with Western materials and theories of anatomy, and perspective.
The society sought to ensure high quality works from its members, and exhibitions of the finest works were held in Indonesia and abroad. The society ceased to be active after the onset of World War II. Paintings by several Pita Maha members are included in the catalogue, among them; Ida Bagus Made noted especially for his paintings of Balinese religious and mystical themes; and Anak Agung Gde Raka Turas, whose underwater seascapes have been an inspiration for many younger painters.

Painters from the village of Batuan, south of Ubud, have been known since the 1930s for their dense, immensely detailed paintings of Balinese ceremonies, daily life, and increasingly, “modern” Bali. In the past the artists used tempera paints; since the introduction of Western artists materials, watercolors and acrylics have become popular. The paintings are produced by applying many thin layers of paint to a shaded ink drawing. The palette tends to be dark, and the composition crowded, with innumerable details and a somewhat flattened perspective. Batuan painters represented in the catalogue are Ida Bagus Widja, whose paintings of Balinese scenes encompass the sacred as well as the mundane; and I Wayan Bendi whose paintings of the collision of Balinese and Western cultures abound in entertaining, sharply observed vignettes.

In the early 1960s,Arie Smit, a Dutch-born painter, began inviting he children of Penestanan, Ubud, to come and experiment with bright oil paints in his Ubud studio. The eventually developed the Young Artists style, distinguished by the used of brilliant colors, a graphic quality in which shadow and perspective play little part, and focus on scenes and activities from every day life in Bali. I Ketut Tagen is the only Young Artist in the catalogue; he explores new ways of rendering scenes of Balinese life while remaining grounded in the Young Artists strong sense of color and design.

The painters called “academic artists” from Bali and other parts of Indonesia are, in fact, a diverse group almost all of whom share the experience of having received training at Indonesian or foreign institutes of fine arts. A number of artists who come of age before Indonesian independence was declared in 1945 never had formal instruction at art academies, but studied painting on their own. Many of them eventually become instructors at Indonesian institutions. A number of younger academic artists in the catalogue studied with the older painters whose work appears here as well. In Bali the role of the art academy is relatively minor, while in Java academic paintings is more highly developed than any indigenous or traditional styles. The academic painters have mastered Western techniques, and have studied the different modern art movements in the West; their works is often influenced by surrealism, pointillism, cubism, or abstract expressionism. Painters in Indonesia are trying to establish a clear nation of what “modern Indonesian art” is, and turn to Indonesian cultural themes for subject matter. The range of styles is extensive Among the artists are Affandi, a West Javanese whose expressionistic renderings of Balinese scenes are internationally known; Dullah, a Central Javanese recognized for his realist paintings; Nyoman Gunarsa, a Balinese who creates distinctively Balinese expressionist paintings with traditional shadow puppet motifs; Made Wianta, whose abstract pointillism sets him apart from other Indonesian painters.

Since the late 1920s, Bali has attracted Western artists as short and long term residents. Most were formally trained at European academies, and their paintings reflect many Western artistic traditions. Some of these artists have played instrumental roles in the development of Balinese painting over the years, through their support and encouragement of local artist. The contributions of Rudolf Bonnet and Arie Smit have already been mentioned. Among other European artists whose particular visions of Bali continue to be admired are Willem Gerrad Hofker, whose paintings of Balinese in traditional dress are skillfully rendered studies of drapery, light and shadow; Carel Lodewijk Dake, Jr., whose moody paintings of temples capture the atmosphere of Balinese sacred spaces; and Adrien Jean Le Mayeur, known for his languid portraits of Balinese women.

Agung Rai feels that

Art is very private matter. It depends on what is displayed, and the spiritual connection between the work and the person looking at it. People have their own opinions, they may or may not agree with my perceptions.

He would like to encourage visitors to learn about Balinese and Indonesian art, ant to allow themselves to establish the “purity in the connection” that he describes. He hopes that his collection will de considered a resource to be actively studied, rather than simply passively appreciated, and that it will be enjoyed by artists, scholars, visitors, students, and schoolchildren from Indonesia as well as from abroad.

Abby C. Ruddick, Phd
“SELECTED PAINTINGS FROM THE COLLECTION OF THE AGUNG RAI FINE ART GALLERY”


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