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What is outsourcing?
Outsourcing is delegating a company's non-core functions to external organizations. For example, maintaining in-house cleaners or a dedicated security service may not always be cost-effective or practical for companies. Instead, they turn to private security firms or cleaning companies, saving on recruitment, training, and personnel management, while effectively handling the necessary tasks.

The word outsourcing comes from the English term "outer source using," meaning 'the use of external resources.' Outsourcing in its modern form emerged in the 1930s in the United States, during the rivalry between Ford and General Motors.

The head of General Motors, Alfred Sloan, took over the company when it was on the verge of collapse. He developed an outsourcing system — specialized production and management functions were delegated to dedicated firms. This strategy allowed Sloan not only to catch up with but also significantly surpass the competition. Later, Ford adopted this business model as well, but by then, its decisive leadership had already been lost

The idea of outsourcing is not new to Russia either. For example, during the Soviet Union, there were canteen trusts — associations of separate companies that provided catering services for Soviet enterprises. Modern forms of outsourcing only emerged in Russia in the 1990s, with the arrival of the market economy.
What is the difference between freelancing, outsourcing, and outstaffing?
Freelancing
— is the engagement of an independent specialist without officially hiring them as a permanent employee of the company.
Outstaffing
— is almost the same, but instead of hiring freelancers directly, non-staff employees are hired from a specialized organization.
Outsourcing
— is the transfer of non-core company functions to external organizations.
The differences between these forms of labor relations are in the amount of work, duration of cooperation and distribution of responsibility. Freelancers are hired for one-time tasks. For example, a company can hire a designer who will draw a specified number of images for a certain project. Such specialists are contracted under a work contract, a service agreement, or a copyright agreement.

The boundaries between outsourcing and outstaffing are less distinct. In both cases, these are long-term relationships. However, in outsourcing, the hiring company pays for a certain amount of work and signs a service agreement. The client does not care who performs the tasks or where they are completed, as long as they are done efficiently and on time. For example, an outsourcer may continuously offer accounting services to a company. The company does not concern itself with who, where, or how the work is done, as long as everything functions properly.

In outstaffing, companies sign an agreement for the provision of personnel. In this case, the client pays for specific specialists assigned to a particular job position. For example, an outstaffed salesperson can be hired to work at the cash register in the employer's store. Here, the key factor is not how many customers the employee serves but rather how many hours and days per week they are engaged in work.
Which Companies Use Outsourcing?
In 2015, about a third of Russian companies were already using outsourcing. By 2017, the turnover of this market in Russia had increased by 10%, and by 2020, it had grown by 13.7%. Corporations around the world have long shown a strong and ongoing interest in this practice.
Nike has outsourced all production functions. The company is only engaged in design development and sales of sportswear and footwear in its stores. The products themselves are made by contracted organisations concentrated in the Asian region. Despite this, Nike's revenue has grown by 540% over the past ten years.

Another successful example of outsourcing is provided by IKEA. The company has outsourced almost all of its transportation and manufacturing functions to third-party contractors, while it only deals with retail sales through its own network of stores.

Kodak has been delegating IT tasks to IBM since 1989. Their 22-year-old agreement is considered the starting point in the history of IT outsourcing, after which more and more corporations began to pay attention to this form of collaboration with contracting organizations.

Google outsources the development of some products and customer support, according to Rubrain.com. This allows the company to provide quality feedback to consumers and focus on the key tasks of its business.
Benefits of Outsourcing
  • Outsourcing helps
    Outsourcing helps to save costs, gain access to highly qualified personnel and avoid common issues that arise when hiring full-time employees.
  • Reduction of labour costs.
    The hiring company doesn't need to pay for the training of outsourced employees, purchase equipment or software, or spend on motivational support and bonuses.
  • Independence from circumstances
    Under the terms of the signed contract, the outsourcer is obligated to provide services on time. The work will be completed as scheduled, even if freelance employees quit, fall ill, go on maternity leave, or take vacation.
  • Improvement of non-core services quality.
    The client gains access to the intellectual capital of an experienced, highly specialized organization and to professionals who are experts in their field
  • Focus on the company's core activities
    Resource costs are reduced, which would otherwise be spent on managing non-core processes, and additional time and energy are freed up for the HR team.
  • Effective Services
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