Basic things about outsourcing
Q1. What is the difference between onshore and offshore outsourcing?
Answer: The interviewer is trying to assess your basic understanding of the BPO sector here. You need to mention that any project or task that is allotted outside the country (which is not nearby) is referred to as off-shore outsourcing whereas anything outsourced to a nearby country is known as onshore outsourcing.
Q2. What are the major types of outsourcing?
Answer: There are several types of outsourcing namely onshore outsourcing, offshore outsourcing, and near-shoring. Professional outsourcing is the most popular one with IT outsourcing being the most profitable form of outsourcing.
Q3. What is professional outsourcing?
Answer: Professional outsourcing refers to specialized services such as accounting, legal, purchasing, information technology (IT), IT or administrative support, etc. It is a very common area of outsourcing as a service. Professional outsourcing leads to substantial cost savings as core businesses only need to pay for services actually provided while accessing high-quality resources. This reduces overhead costs significantly.
Q4. What is IT outsourcing?
Answer : IT outsourcing is a type of professional outsourcing. Over the past few decades, IT outsourcing has become one of the most common services. Most businesses seek technology-related resources or subcontract outside an organization for an information technology function. Businesses these days use IT outsourcing for functions like infrastructure and software development, maintenance and support. For instance, companies outsource IT management and data storage needs as it is less expensive compared to building an in-house IT team. Large businesses a segment of IT functions.
Q5. What is multi outsourcing?
Answer: Multisourcing applies to any business area, but is commonly used when referring to IT outsourcing and IT services. It was introduced by a market technology research firm in 2005 and is most frequently used by large enterprises, where IT operations and technology infrastructure are contracted out to multiple vendors. This outcome-focused outsourcing offers better visibility into real project status information.
Q6. What is manufacturer outsourcing?
Answer: Manufacturer Outsourcing is a common outsourcing service. Companies that involve the production of goods need to understand ‘What is outsourcing?’ This is mostly quite industry-specific. Companies that lack economies of scale take it up to compete with larger enterprises.
Q7. What is process-specific outsourcing?
Answer: Process-specific Outsourcing means outsourcing specific operation-related aspects to other companies or units that specialize in them. E.g. Myntra can outsource the delivery of a packaged dress to a courier company like BlueDart or Ekart. This comes with details like delivery timelines, customer contacts and costs, which may allow a company to focus on its strength and improve customer service.
Q8. What is offshoring?
Answer: The practice of offshoring is outsourcing business functions to another country. Work is often ‘offshored’ to reduce labor costs. It is a strategic way to enter new markets and tap cheap talent, which was unavailable domestically.
Q9. What is reshoring?
Answer: Companies earlier used to send manufacturing jobs from the US to areas like China and India for low-costs. However, manufacturers began to realize that offshoring production services to Asian countries were not as cost-effective. So this realization led US-based companies to start bringing their offshore manufacturing jobs back home. This process is referred to as reshoring. Some companies are going even further and doing insourcing —which is the opposite of Outsourcing.