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What is Corporate Outsourcing?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 06 December 2016
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    Conjecture Corporation
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Corporate outsourcing is the strategy of securing vendors to manage specific tasks associated with the ongoing operation of the company. There are several key functions that are often outsourced by large and small companies, making it possible for the business to save money and divert resources to other areas of the operation. These key functions include different accounting processes, marketing and public relations, and human resources.

One of the most popular forms of corporate outsourcing has to do with processing payrolls. By engaging the services of a competent payroll service, it is possible to appoint one person within the company to manage even large payrolls that include different payment schedules for hourly and salaried employees. After supplying the provider with the basic information, data on the client file is used to process the payroll, calculate employer taxes, withhold employee taxes, cut checks, and manage direct deposits to employee bank accounts. Business process outsourcing of this type can save even small companies a significant amount of resources in terms of both time and money.

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General accounting functions is a type of corporate outsourcing that has a special appeal to small businesses. Outsourcing the process of creating and maintaining accounts payable and receivable, processing payments to vendors, issuing invoices to customers, and applying payments to outstanding invoices requires precision as well as time during the business day. For business owners who are just starting out, outsourcing accounting functions makes it possible to focus on promoting and growing the company, rather than having to spend time each day on paperwork.

Another common option in corporate outsourcing has to do with human resources. Rather than maintaining a full fledged department, a single human resources manager will interact with a provider that helps to keep the company abreast of any new regulations related to employees and employee rights. The outsource partner can also help mitigate in employee disputes, and also assist in the maintenance of personnel records, including the issuance of commendations or some type of written disciplinary action.

Many companies today engage the services of independent public relations and marketing firms, rather than handle those functions in-house. Corporate outsourcing of this type allows the business to concentrate on other matters while professionals handle all the details related to market research and the creation of promotional campaigns. Because the outsource partner has access to resources that would cost the client a great deal of money to acquire, there is a significant savings to this approach. In addition, marketing experts bring a great deal of expertise to the table, something that many small and mid-size businesses would find it hard to bring to the task.

Corporate outsourcing is especially advantageous for smaller businesses, in that the use of vendor partners can help sole proprietorships and other smaller entities appear to be much larger than they really are. In industries where size is equated with competency, this can allow new businesses or businesses that wish to remain smaller to compete with corporations that at significantly larger. This is especially true when the outsourcing partner is willing to private brand services and present themselves as part of the client’s business.

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