What is outsourcing?

Outsourcing is a strategic management model. In the late 20th century, in order to maintain the organization's core competitiveness and face the dilemma of insufficient manpower, companies could entrust the organization's non-core business to external professional companies. To reduce operating costs, concentrate human resources and improve productivity. Outsourcing can free up group organizations to focus more on their core business. Outsourcing partners add management time to the business and improve overall quality while the performers focus on their specialized business.

The main outsourcing methods include business contracting (BMC) and entrustment agency

1. The contract business pipeline method is purely a third-party outsourcing purchase service model. The third party (contractor) ) assumes all or most of the responsibilities for investment and operation management, and assumes investment risks; the outsourcer is only bound by the performance and contract of the third party completing the business, and does not need to bear third-party investment risks; the contract is terminated, and the cooperation is terminated.

2. The delegation method is that the outsourcing party entrusts the facilities required for the same business to a third party for operation, which mainly include contracting, leasing, franchise management, and BOT (Build-Operate-Transfer) franchise management. 4 modes. No matter which model is adopted, the underwriter must bear the investment risk. Even if it is a BOT model in which a third party apparently invests, these investments will actually be fully recorded in the operating costs in the form of depreciation fees, and will be fully paid by the outsourcer during the franchise contract period. return.