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What Is Application Outsourcing?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 24 August 2014
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Also known as business process outsourcing, application outsourcing is the process of assigning specific projects or tasks associated with the operation of a business or other organization to an outside entity. This is often done as a means of maximizing the resources available to the organization, while also making use of the professional expertise of others to make sure the tasks are accomplished in a timely and efficient manner. Over the years, outsourcing of this type has become increasingly common for businesses and organizations of all sizes, and can involve everything from creating customer invoices to handling customer service and support issues.

Small businesses often make use of application outsourcing as a way of getting tasks done without having to place further stress on the internal resources of the company. One common example has to do with accounting processes. A small business may choose to outsource its bookkeeping needs to an accounting firm, rather than employ in-house personnel to handle the payroll, issue invoices, post payments to the receivables, and issue payments to the company’s vendors. By outsourcing the accounting functions, the small business eliminates the need to cover salaries and provide benefit packages to an accounting department, thus decreasing the bottom line of the operation.

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Larger businesses also make use of application outsourcing. Along with accounting functions, a corporation may choose to outsource such vital functions as the marketing and sales efforts. This strategy allows the business to often pay nothing more than fixed monthly fee to the vendor, plus a percentage of the sales generated as a result of the efforts of the partner. In the process, the corporation avoids having to create a salary and commission structure for members of a sales department, does not have to be concerned with providing benefits like health insurance or a pension plan, and does not to deal with firing non-productive employees. All those issues shift to the vendor partner, who provides benefits to his or her employee force.

One of the more popular applications for outsourcing today is customer care and technical support. Many companies in the United States, Canada, and the United Kingdom outsource these functions to professionals located in other parts of the world. In the best of scenarios, this kind of application outsourcing has saved the companies a great deal of money while also providing their customers access to service and support of high quality. In the worst case scenario, application outsourcing of this kind results in frustration among customers, some of whom choose to severe their business relationships with those companies, and seek out suppliers and vendors who offer domestic customer service and support.

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