As the business organization It grows, it is immersed in a series of different activities that demand its attention, it must meet the needs, goals and challenges through the application of appropriate strategies, large, medium and even small companies sometimes require the fulfillment of certain tasks Specialized that if developed within would generate high investments, consumption of resources, new personnel and other factors that if the investment of doing so were compared to looking for a third party to perform it, the equation is favorable for this last option because the saving of Time and expenses also becomes a beneficial fact to a great extent. Outsourcing, or also known as outsourcing, outsourcing etc. basically consists of what is described above, that is,hiring a third party to provide certain services necessary for the organization on a temporary basis so that the company saves resources of any kind and at the same time solves its specific needs.
Outsourcing is used in various production and administrative areas, but its greatest growth is seen in the hiring of technological services, a market that currently exceeds $ 31 trillion worldwide. In Mexico, there are more and more industries that choose to deliver to a third party the basic operation of personnel and payroll administration, telecommunications engineering services, development and execution of engineering projects, general and specialized maintenance of the company, etc., which means that this area is within the preferences and business decisions of the country, therefore, it is a sector that is not decreasing.
In the following information on this topic, general aspects of the strategy, advantages, disadvantages, factors and various topics that enrich the vision of outsourcing on your potential clients will be taken into account.
"DEVELOPMENT OF THE SUBJECTS AND SUBJECTS"
GENERAL
The history of outsourcing dates back to the Second World War, where industries tried to be more independent from their suppliers so as not to be at a disadvantage, however, by becoming unprofitable, it evolved towards the specialization of companies that provided their services to Those who needed them due to the technological advance that required constant investment.
At the beginning of the 70's, the use of outsourcing began to gain credibility, as a business strategy, focused on the areas of technological information in companies; but the term outsourcing was implemented until 1980. In 1998, outsourcing reached a worldwide turnover of one hundred billion dollars, and according to recent studies, this amount will skyrocket to 282 billion dollars. In recent years there has been a rapid growth in the subcontracting of services between developed and developing countries, what has commonly been called off shore outsourcing.
One of the main engines of the growth of off shore outsourcing is savings, in direct production costs by using skilled labor, with lower wages than those that would be paid if hired by companies directly, as is the particular case of the India, China or Russia.
According to the origin of the word, outsourcing is an English term made up of two words «out» which translated into Spanish means outside and «source» whose meaning is source or origin, that is, the expression refers to something that is outside the origin, which can be defined as a process used by a company in which another company or organization is contracted to develop a certain area of the contracting company.
The objective of this process seeks to find an external source that can operate in a business area more efficiently, thus obtaining more time and resources to focus on the key aspects of business management.
Some definitions of this strategy are defined by the following authors:
Method by which companies provide some activity, which is not part of their main skills, to a specialized third party. By main or central skills is understood all those activities that form the core business of the company and in which there are competitive advantages over the competition. Schneider, B. 2004. According to Werther and Davis, (2000) outsourcing services are known as external services that a company requires to complete administrative functions or certain technical tasks that it can no longer perform internally for multiple reasons, and Most of the time these are for economic reasons.
Mondy 2005 considered Outsourcing as an external supply whose process consists of transferring the responsibility of a service area and its objectives to an external supplier, driven by the need to reduce costs caused by scarce income or more limited budgets, mergers and acquisitions that They have created many redundant systems. For Chase and Alilano, (2005) subcontracting is the action of moving some of the company's internal activities and decision-making responsibilities to other external suppliers. Subcontracting involves more than common purchase and consultation contracts, since not only the activities are transferred, but also the resources that allow them to be carried out, including personnel, facilities, equipment, technology and other assets.Likewise, the responsibilities for making decisions regarding certain elements of the activities are transferred.
External suppliers represent a valuable instrument for the growth of a company and for the preservation of its competitive position. They allow a company to focus on its skills and to delegate to external companies the performance of activities for which you are especially suitable. For Alarcón, J, 2007. It implies the hiring and subsequent long-term delegation of one or more noncritical processes for a business, to a more specialized supplier in order to achieve greater effectiveness, which allows guiding the best efforts of a company to the neuralgic needs for the fulfillment of a mission.
TYPES OF OUTSOURCING
The classification of the types of outsourcing is distinguished by being focused on each of the areas in which the company can receive support;
- Outsourcing of financial systems.Outsourcing of accounting systems.Outsourcing of computer systems. Outsourcing in the Human Resources area. Outsourcing of administrative systems. Outsourcing of secondary activities.
Modalities of the types of outsourcing;
- Offshoring: Also known as Off-shoring, it involves contracting services to third parties located in countries that offer lower costs due to labor legislation, among other factors. In-house: It is the outsourcing that occurs in the organization's facilities. contracting service.Off-site: When the outsourcing service occurs in the facilities of the company that provides it.Co-sourcing: Modality in which the outsourcing service provider offers some type of added value to its client, Collaborative: Applies to the use of idle capacity in operations to produce articles or provide services to a third party. The term emphasizes opportunities to collaborate with players who had not traditionally been thought of
ADVANTAGES AND DISADVANTAGES
The implementation of this strategy also implies a series of benefits and setbacks that, if analyzed, could even be minimized:
Advantage:
- For the company it is easier to focus on fulfilling its main activities. The costs of investing in the plant or areas involved are reduced. The company responds quickly to changes in the environment. It reduces the weaknesses and threats of the organization by solving a problem more.Increases the commitment to a specific type of technology that allows to improve the delivery time and the quality of the information for critical decisions, which, being occupied by qualified personnel, saves the training and hiring of new plant personnel. sustained competitive advantage through a change of rules and a greater scope of the organization. It allows to have information services quickly considering the competitive pressures.
Disadvantages:
The organization does not keep up to date with new trends in technology, therefore decreasing its opportunities for process innovation.
The service provider may use the information collected to benefit in the future.
If not costed correctly, outsourcing may not be profitable. Decrease in the general control section of the company towards its projects.
It allows to have information services quickly considering the competitive pressures. Application of talent and the organization's resources to the key areas for competition. Increase in the flexibility of the organization and decrease in its fixed costs (investment in plant and equipment).
CRITICAL FACTORS IN THE IMPLEMENTATION OF THE PROCESS
Clarity of objectives
The client must have well defined the goals that are intended to be achieved with outsourcing, these must be adequately stated, the supplier having committed to be measured in their performance based on them.
Realistic expectations
Control level
The analysis of any activity to be subcontracted should begin by considering the following questions:
- What is the probability of obtaining a competitive advantage in an activity, considering the transaction costs? If an activity were outsourced. What is the vulnerability to which it would be subject due to market failures in the stratum to which it belongs? What can the organization do to reduce vulnerability through structured commitments with service providers, maintaining appropriate control but with the necessary flexibility in the customer-supplier relationship?
If the competitive margin and vulnerability are high, the organization needs a high level of control over the outsourcing it will perform and must develop internal strategic skills through long-term contracts or commitments of shared ownership, implicit or explicit.
Detailed definition of the services included In many occasions the provider tends to be vague about the services included in the basic cost of an outsourcing transaction.
This lack of definition is often used successfully as a client penetration strategy: it wins the client with artificially low prices and then increases the budget offered once the contract is signed. After the operations, the provider begins the list of exceptions or services not included, which originate innumerable additional charges.
To avoid this, the clear and precise definition of all the services included in the outsourcing transaction is extremely important. The more precision, the fewer surprises in the future.
Adequate definition of service levels Each service must have associated both the adopted service model, as well as the acceptance parameters and measurement of its performance. Thus the progress of the relationship can be monitored with various indicators, which serve both to show the success of the transaction and to take preventive and / or corrective measures in the event that some services show tendencies to delay or failure, before becoming in critical problems.
Financial flexibility
The success of any outsourcing transaction is based on the economic benefit of both parties.
Every transaction must incorporate sufficient financial flexibility to adapt to a possible change in the economic environment that occurs during the execution of the project or work and that may affect the total cost of the commercial relationship between both parties.
Supplier Commitment One of the strongest competitive advantages of outsourcing is the availability by the supplier of highly qualified resources to solve operational problems in the client's IT infrastructure. As such, the provider must commit to maintaining the promised availability throughout the relationship. Avoiding the excessive rotation of personnel, as well as the use of long- term tied-up clients as a school for their professional cadres with their subsequent resignation to new clients. Like any successful business relationship, it is necessary to guarantee a continuity and minimum quality on the part of the supplier in the human resources assigned to the attention and fulfillment of the contracted commitments.
Management compliance
The success of any long-term project depends largely on the continuity of the management team responsible for it. In the case of outsourcing, this requirement is further emphasized, since the general conditions of the transaction are set just before the formal start of the relationship, at the time of the negotiation and signing of the service provision contract. From there, the success of the transaction depends on the proper interpretation and monitoring of the clauses established in the contract, it is essential that the management teams responsible for the project by both parties are fully involved in the contract negotiations, in order to lead to the relate the spirit of the contract.
Technological flexibility
Technological innovation is prevalent in the computer world. Outsourcing transactions are generally expressed in a long-term service provision contract, therefore, to avoid problems caused by technological obsolescence not foreseen in the original transaction, it must incorporate definitions and procedures for technological updating, as well as basic evaluation criteria. and incorporation of new technologies into the services provided, which guarantee that technological outsourcing yields real benefits to the business.
Operational flexibility
The expected result of an outsourcing solution is an improvement in the efficiency of the outsourced operation. The variety of situations and changes in operating conditions that may occur during the course of the relationship makes it important that the original transaction incorporates enough elements that can be used later, to change the operating terms, including the definition of the services provided without the need for resort to renegotiations the contract.
SUBCONTRACTING IN MEXICO
The existing labor dynamics in Mexico is characterized by being flexible and is constituted under the outsourcing of work relationships through the hiring of a third party to execute a production process inside or outside the contracting company.
This legal basis is found in the Federal Labor Law. This project of expansive opportunity for the contracting companies has generated apparent and multiple benefits, for example, the possibility of reducing expenses, having fast information services, controlling operating expenses, and one of the most important reasons is having staff highly qualified and specialized, and thus have specific capabilities for the company.
The private sector represented by the Chamber of the Transformation Industry (canacintra), one of the business consultation bodies made up of the industrialists of the Republic and its Subcontracting Commission, manages to identify the following advantages and disadvantages of subcontracting:
Opportunities
-Strengthen processes, interdependence and complementarity between companies.
-Substitute imports.
-Allow greater integration of smaller companies into the manufacturing and assembly processes of goods.
-Ideal alternative to continue operating and start your foray into the international market, either directly or indirectly
-Improvement of quality; This form of business opportunity is found as in other countries in expansion of the supply of labor, for example, financial and accounting systems, marketing (by various mechanisms such as call centers or telemarketing), various processes and activities related to resources human and administrative systems, company surveillance, organization of events, transportation, payroll process, general and financial accounting, human resources and recruitment, accounts receivable and billing process, the so-called technological services, etc.
Disadvantages
- Informality in delivery times Poor product quality Difficulties for micro, small and medium-sized companies to join the subcontracting system due to:
- Lack of knowledge, Low quality of subcontractors' products, lack of financing, little technical capacity, Failure to meet delivery deadlines, lack of adequate business management. -Increases production costs. You pay more when you subcontract, you have more costs.
The opportunity cost achieved by companies that contract this service in Mexico fluctuate and report a reduction of 40% and 50% of costs that implies a production process, or part of it. The areas of the economy where the greatest demand for this scheme is observed have been mainly: automotive, energy, public services, health, manufacturing, telecommunications and entertainment. The concept of outsourcing is a variant between each attempt to define it, understand it, apply it.
Outsourcing or subcontracting, in the labor and social security legal framework, did not refer to any specific meaning. Perhaps because the term is about a business anglicism linked more to economists, sociologists, administrators, but that is legally vague to identify it. The terms “outsourcing”, “subcontracting”, “outsourcing”, “relocation”, among others, are read and heard; which are not necessarily homogeneous in their content. Outsourcing calls for the appearance of a figure where the relationship was bilateral (bond or employment relationship), subcontracting is more identified in civil law in general; refers to the possibility that some of the activities are “delegated” or commissioned by another company.With regard to outsourcing, it refers to the idea that the tasks that were carried out within a company, under this term it is literally understood that they leave the company, however, it is increasingly evident that there is not necessarily an exit from activities but only the hiring of staff, which begins to make understanding confusing. The fundamental problem, in any type of hiring where work is relocated, outsourced or subcontracted, has to do, on many occasions, with the lack of clarity on the way in which the rights of workers are protected, and against this In this case, the Mexican legal structure shows current and current updates that must be carefully observed.however, it is increasingly evident that there is not necessarily an exit from activities but only the hiring of personnel, which begins to make understanding unclear. The fundamental problem, in any type of hiring where work is relocated, outsourced or subcontracted, has to do, on many occasions, with the lack of clarity on the way in which the rights of workers are protected, and against this In this case, the Mexican legal structure shows current and current updates that must be carefully observed.however, it is increasingly evident that there is not necessarily an exit from activities but only the hiring of personnel, which begins to make understanding unclear. The fundamental problem, in any type of hiring where work is relocated, outsourced or subcontracted, has to do, on many occasions, with the lack of clarity on the way in which the rights of workers are protected, and against this In this case, the Mexican legal structure shows current and current updates that must be carefully observed.outsources or subcontracts, has to do, on many occasions, with the lack of clarity on the way in which workers' rights are protected, and in this case the Mexican legal structure shows current and current updates that must be carefully observed.outsources or subcontracts, has to do, on many occasions, with the lack of clarity on the way in which workers' rights are protected, and in this case the Mexican legal structure shows current and current updates that must be carefully observed.
CONCLUSION
Outsourcing or outsourcing is a business strategy of great impact for the organization as developed in this topic, its importance lies in solving problems or specific needs of the organization that can be resolved through an intermediary and above all the benefit economical to do. Intrinsically this contributes to the specialization of third parties and the non-specialization of contracting companies for obvious reasons, however, it is not always possible to cover everything in the same organization. It is essential to carry out a previous analysis of the company to get to know it in detail and to know if using this tool will generate real benefits and how they will be reflected over time. It is also vitally important to review the regulations that guide these practices in Mexico,specifically or in the country where it is carried out, since the interests of workers may be violated by a misinterpretation of the rule. Outsourcing has marked a watershed in the way of doing business collaboratively, since these services are paid for and mutual benefits are obtained. Therefore, outsourcing is a vitally useful and adaptable tool for market changes.
THANKS
The Orizaba Technological Institute is thanked for providing the necessary resources for the development of this article, Dr. Fernando Aguirre y Hernández for the assignment of the topic and the Engineer Monserrat Jiménez Hernández for their valuable contributions.
REFERENCES
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