About Outsourcing....?

I can understand outsourcing a specialty project that is not a standard business function, or large scale functions like those irritating call centers, but why outsource a basic function like accounts payable or human resources? If the employer has to pay those individuals a vendor that performs the same function will pay similar individuals to perform those same job functions in addition to wanting to make a profit. So unless its a specialty function, why do it?

There are companies specialized in HR recruiting. They do all the jobs on behalf of the employer like background checks, educationals facts, previous work history, etc.... that is time consuming and tricky....

Well what comes to mind immediately is the Doctor's office. My doctors outsource their accounts payable to a central accounting office. They pay more for the service than if they were able to hire a competent person by theirselves but by outsourcing it they get a few advantages it. They don't have to deal with hiring a competent person-they depend on the billing company to do that. Turnover, training, and sick days are not their problem! They also may not have the resources to pay a really top notch person to handle their small amount of billing. This way several offices get a very highly specialized person who is top in their field--so they actually end up collecting more! They only end up paying a fraction of their health benefits, 401K plan etc.

My husband works for several doctors and billing is such a big complicated process that a person who is really knowledgeable about collecting and billing is going to quickly "move up" to a higher paying job at a hospital etc. The centralized billing procedure actually does save them money.

That鈥檚 a good question and an issue with which every business must deal. It can be a philosophical and/or financial decision.

Often it has to do with the philosophy senior management and the resulting business model they want to follow such as vertical or horizontal integration. Some want control over every aspect of the organization and its processes, while others want to deal only with those critical issues involving their core competencies.

It can, and should be, a financial decision as well. Whether meeting a long or short term need, it is often less expensive to outsource to an organization that already has the expertise or specialized equipment, rather than building the infrastructure in house.

Example:
You have 3 accountants in the United States of America working for your company for $20.00 USD per hour and they graduated from Community College two decades ago.

You hire 3 accountants in Mexico working for your company for $5.00 USD per hour and they graduated from one of the best Business Schools in the World (Instituto Tecnol贸gico de Estudios Superiores de Monterrey) a year ago.

Who would you hire?