Many companies prefer delegating non-critical processes to a third-party vendor. This makes complete business sense when they want to benefit from the vendor’s knowledge or cost-efficacy. This option falls under different types of outsourcing. The classification depends on the vendor’s location and includes offshore, nearshore, and onshore outsourcing.

This business practice has gained tremendous traction in the last few decades. The key drivers for this phenomenon are the immense expertise and lower cost overheads of such outsourced partners. Businesses in developed nations can get the same work done in developing countries due to the whopping low rates of getting the job done.

The table makes it clear how the same work can be done in an offshore location for a fraction of the cost of expertise. This is the main USP of outsourcing. The right choice of outsourcing partner can help you out with their domain knowledge and low cost of operations. They can also work their way through security risks and regulatory challenges.

This post will cover the main types of outsourcing prevalent in the business world. We will also look at some emerging types based on new-age business demands.

Which are the Main Types of Outsourcing?

Outsourcing comes in various forms. They will be curated to meet specific business or functional needs. The formats below are extremely useful in optimizing third-party resources. As a result, the internal team can focus on core operations and business growth.

1 – Business Process Outsourcing (BPO)

Business Process Outsourcing (BPO) is one of the types of outsourcing strategies that organizations use to delegate non-core functions. This way, they can be more effective with what’s important to the core business. At the same time, they get to cut costs. Some of the services that are commonly outsourced include –

– customer services,

– lead generation,

– sales support,

– professional employer organization (PEO),

– scheduling, and

– technical support.

BPO services may also span benefits administration and virtual assistants. It also enables data entry clerks to ease clerical workflow. Plus, it streamlines support provided by back-office operations such as financial and human resources.

Such offshore or nearshore outsourcing enables organizations to tap into a broad range of specialized manpower. It also lets you set Standard Operating Procedures and workflows and gain access to skilled professionals.

Pros and cons of Business Process Outsourcing

Pros 

  • Reduces operational costs: You leverage cost-effective offshore and nearshore talent. As a result, you get to cut down expenses on salaries and infrastructure.
  • Improves efficiency through process optimization: You can ensure that tasks are completed on time and as per expectations. Hence, you can expect streamlined workflows and specialized expertise.
  • Access to offshore and nearshore outsourcing talent: Companies can tap into a global talent pool for their specific needs for high-quality service delivery. As a result, no more extensive in-house hiring or training is needed.

Cons 

  • Risk of data breaches and compliance issues: Handling sensitive customer data is a part of many BPO operations. However, this action can increase security vulnerabilities. But you can counter this with strict data protection measures.
  • Loss of control over customer interactions: Outsourced customer support teams may not align with the company’s service standards. Hence, it is likely to impact customer experience and brand reputation.
  • Dependency on external providers: There is a chance of over-dependence on third-party vendors. If they fail to meet service-level agreements, then it may lead to operational disruptions.

2. Information Technology Outsourcing (ITO)

This type of outsourcing allows businesses to delegate IT functions to third-party providers. As a result, they can bring down costs and access specialized expertise. Many companies leverage professional outsourcing services to manage complex IT operations efficiently. Key IT services that can be outsourced include:

Information Technology Outsourcing services

– Infrastructure Services

– Application Development & Maintenance

– Help Desk & Technical Support

– Cybersecurity Services

– Cloud Services

– Business Process Outsourcing (BPO) for IT

– Managed IT Services

Companies also outsource network management and data center operations. Also, they can look after software QA testing and data security. Doing so enhances system reliability and compliance. But Intellectual Property protection remains a concern when partnering with external vendors.

With this outsourcing model, businesses can adopt cutting-edge technologies. In addition, they get to scale IT operations efficiently and focus on strategic growth. You should ensure total diligence under this arrangement so that issues like cybersecurity risks do not occur.

Pros 

  • Access to cutting-edge technology and expertise: ITO connects businesses with skilled professionals. They will have competence in the latest IT innovations and best practices.
  • Cost savings on IT infrastructure: You can significantly reduce overheads on IT infrastructure setup. Additionally, the cost of human resources can be eliminated totally.
  • Scalable and flexible IT managed services: It is possible to scale up IT support and software development as per business demands. Hence, there is no need to go through the process of hiring and training more people, as this will be done by the external provider.

Cons 

  • Potential cybersecurity risks: When you entrust external providers with sensitive and confidential data, it might open the process to cybersecurity challenges. Hence, it is necessary to vet providers who have a strong IT security stance and meet strict security protocols.
  • Communication challenges with remote IT support: It is possible that the offshore center’s cultural fit and language can be barriers to success. Even time zone differences can give rise to a lack of one-on-one interactions.
  • Vendor reliability concerns: If you rely too much on third-party IT experts, their operational issues can lead to severe disruptions in your business as well.

3. Software Development Outsourcing

Businesses can now create, improve, or maintain applications without the need to hire programmers in-house. For this, they can leverage different types of outsourcing. As a result, companies can connect with specialized experts from around the world.

These professionals have expertise in various programming languages. In addition, they also know development methodologies and frameworks. This approach allows businesses to access top-tier talent without the need for in-house hiring.

Outsourcing accelerates development cycles. It also cuts expenses and enables organizations to expand project teams as needed. It is also beneficial for companies who want to exploit new technology frontiers like AI, blockchain, and cloud computing, among others.

Pros 

  • Cost-effective development: You can access global tech talent at affordable price points for quality work.
  • Faster time-to-market: Professional outsourcing services can accelerate development cycles. As a result, you get a chance to launch products and versions faster and in an efficient manner.
  • Ability to scale teams based on project needs: Also, scalability is a big plus point in software development outsourcing.

Pros of Software Development Outsourcing

Learn more: Benefits of Outsourcing Software Development vs. In-House Development.

Cons 

  • Intellectual property and data security risks: It is a problem to share proprietary software ideas with external providers. However, if they have a strong security framework, then this issue won’t trouble you.
  • Time zone and cultural differences: Collaboration and project management may be hampered due to these problems.
  • Vendor selection complexities: You may need to undertake thorough vetting to pick the right outsourcing partner. Consequently, the extensive effort calls for scrutiny of the key factors.

4. Knowledge Process Outsourcing (KPO)

Knowledge Process Outsourcing (KPO) is a type of outsourcing where businesses delegate core, information-related tasks to external experts. These often require a high level of specialized knowledge and expertise in complex subjects. As an example, companies outsource KPO projects such as:

– database management,

– market research outsourcing,

– legal process outsourcing,

– recruitment process outsourcing, and

– third party logistics.

It also caters to specific sectors like IP consulting and financial analytics. The outsourcing industry is led by specific locations that have large talent pools. They can provide valuable advice on specific matters relating to risk management, compliance, or innovation.

The approach may face issues like data security risks or vendor reliance. However, the outsourcing of business processes can be made efficient with the right choice of vendor. It will ensure that services are accurately provided by using experienced professionals from a particular sector of the economy.

Pros and cons of Knowledge Process Outsourcing

Pros 

  • Access to highly skilled professionals: Businesses tap into experts in data analysis and legal process outsourcing. Hence, they will obtain precise and high-quality results.
  • Improves decision-making: Expert research and insights benefit client companies. As a result of their skills, the client business can make informed strategies. They can also do risk assessments.
  • Cost-effective: You can get specialized services like financial research at a fraction of the cost of in-house team members.

Cons 

  • Higher dependency: Over-reliance on external expertise can impede the knowledge hub of the internal team.
  • Risks related to data security: KPOs handle sensitive data in offshore locations. Hence, there is a chance of problems of data breaches.
  • More expensive than traditional BPO: This happens because KPOs demand experienced and specialized talent access.

5. Process-Specific Outsourcing

Process-Specific Outsourcing is a specialized type of outsourcing. In this model, businesses delegate specific operations to external service providers. As a result, they get to improve efficiency and reduce costs. This also helps them become more efficient and gain expert knowledge.

Some of the processes that are outsourced include:

Process-Specific Outsourcing Services

5.1 – Call center operations

Businesses subcontract call center services to manage a high volume of call traffic. The outsourced call center service providers also deal efficiently with customer inquiries and complaints.

5.2 – Database Management

Experts can store and retrieve data securely as a part of this setup. Hence. Client institutions can access the data upon demand. The third party would oversee the optimization of data and provide cybersecurity options and backups.

5.3 – Medical billing and coding

Healthcare providers subcontract healthcare billing and coding services. As a result, they get the work done by specialized agencies to prevent errors and ensure efficiency. They have experience in handling patient records and insurance claims. They also ensure regulatory compliance.

5.4 – Human resources

Here, the external vendor can deliver value in employee training. They can also help with compensation and benefits and appraisal systems, among others. This type of outsourcing helps decrease the workload in the HR department. It also ensures better staff performance.

5.5 – Legal process outsourcing

This type of outsourcing involves getting third-party experts to review legal documents. They can also help in drafting contracts and managing intellectual property. Due to this approach, they can reduce the cost of legal services. Also, they can improve case efficiency.

5.6 – Logistics Outsourcing

This partnership comes in handy for inventory control. It is also essential for warehousing and transportation functions. Logistics outsourcing also improves supply chain operations. Due to this form of supply chain management, you can substantially lower shipment costs and enhance on-time deliveries.

5.7 – Payroll Management

It involves third parties who are responsible for salary disbursement and tax filing. They also ensure compliance with prevalent labor laws. Payroll service providers help in ensuring accurate calculations and timely payments.

5.8 – Product Development

This is where companies give projects involving research, prototypes, and designs to a specialized group of experts. As a result, they ensure faster time-to-market at an optimized cost. Such outsourcing also facilitates the tapping of worldwide engineering expertise.

5.9 – Recruitment Process Outsourcing

In this case, third-party agencies employ state-of-the-art technology and specialized knowledge for talent sourcing and recruiting. As a result, the process improves the quality of the workforce.

There are benefits and disadvantages to process-specific outsourcing, as seen below –

Pros 

  • Enhanced Access to Proficient Talent: Businesses can leverage distinct process expertise from experienced vendors. Hence, they get quality outcomes.
  • Lower Cost of Expertise: Onshore experts are costly. In contrast, the third-party vendors charge a fraction of the costs.
  • Improved Agility and Expertise: Work is delegated to skilled experts. Therefore, the internal team can free up their time for innovation and growth.

Cons 

  • Security Risks: The offshore vendor needs to have robust cybersecurity protocols. This will prevent the breach of the confidential data.
  • Servicing Control: Vendors may tend to drop their quality benchmarks. Hence, they might disrupt the market credibility of the client company.
  • Communication and Coordination: Time zone differences and cultural barriers may prevent the best quality output in this type of outsourcing.

6. Professional Outsourcing

Here, you will work with licensed professionals or industry experts like those in Certified Public Accountants, outbound sales, or recruitment. They will carry out specific tasks needed for excellent outcomes in areas like fund accounting, legal services, or strategic consulting. Other examples include CAD operators and market intelligence experts.

Many businesses use professional outsourcing services to access specialized expertise. Hence, they hire health professionals or outbound sales teams. As a result of this move, they get to achieve their goals and streamline workflows. This approach enhances efficiency and boosts productivity.

Professional Outsourcing

Source: Freepik

Pros 

  • Access to licensed professionals for specialized services: Businesses benefit from certified experts in specific services. So, you get access to experts in Engineering outsourcing and data analysis without incurring full-time hiring costs.
  • Enhanced efficiency and decision-making: Professional outsourcing enables informed business strategies and risk management.
  • Cost-effective alternative to maintaining in-house specialists: Outsourcing reduces overhead costs without sacrificing quality.

Cons 

  • Confidentiality risks: The strategic data shared with third parties may pose security concerns.
  • Potential misalignment: External professionals may lack a deep understanding of internal processes. They may also not be aligned with business goals and company culture.
  • Higher costs: Top-tier industry specialists and niche expertise can be expensive.

7. Project Outsourcing

Project outsourcing is a type of outsourcing where companies delegate specific project-based tasks to third-party contractors. This approach helps reduce costs. Also, it provides access to multiple services requiring specialized skills that may be difficult to find in-house. It provides unmatched scalability and flexibility potential.

Due to this approach, you can easily cope with increased seasonal demand. Also, you can address the lack of sufficient personnel with certain skills. In addition, it may serve to accelerate timelines and create an innovation premium.

Project Outsourcing

Source: Freepik

Pros 

  • Scalability and flexibility: Businesses can expand or reduce outsourced teams as per fluctuating workloads.
  • Access to specialized expertise: External contractors provide skilled support in engineering and IT. Thus, it expands the project scope and complexity that can be executed.
  • Innovation boost: Outsourced engineers and service providers bring fresh insights. Their diverse industry perspectives help a lot in improving creativity and efficiency substantially.

Cons 

  • Communication and language barriers: Misunderstandings between in-house teams and external contractors can slow project execution.
  • Quality inconsistency: Vendors may find it hard to meet internal quality and ETA benchmarks. Also, they might come with security risks of loss of intellectual property.
  • Negative impact on internal teams: The in-house team may face negative staff morale when such project-based initiatives are rolled out.

8. Manufacturing Outsourcing

Manufacturing Outsourcing

With this option, companies can enhance their production capacities. For this, they leverage third-party contract manufacturing. As a result of this step, businesses can obtain positive results with options like offshore outsourcing or onshoring. Cost savings are derived by firms from this form of outsourcing. Also, they enjoy economies of scale and increased flexibility in manufacturing.

Logistics outsourcing and raw material sourcing are some of the different types of outsourcing in manufacturing. Due to this method, they can enhance the smooth running of business activities and facilitate effective supply chain management. However, there may be challenges like quality control and geopolitical factors. These may lead to undesired outcomes.

The practice of outsourcing helps increase scalability and decrease overhead expenses. However, companies should monitor their relationships with third parties well. This will ensure that they maintain their production efficiency as well as keep at bay any risks associated with their business operation. Achieving these objectives calls for proper strategic planning to overcome any interruption and to uphold high product standards at all times.

Pros 

  • Cost savings: Offshore outsourcing allows businesses to lower manufacturing costs. This is done through reduced labor and operational expenses. At the same time, they can maintain quality and efficiency.
  • Economies of scale: Large-scale contract manufacturing reduces per-unit costs. As a result, it enhances production efficiency and improves output consistency.
  • Flexibility in production and supply chain management: Businesses can scale production up or down based on market demand. They can also scale as per raw material sourcing availability.

Cons 

  • Quality control challenges: Working with offshore vendors may lead to variations in product standards and compliance issues. It can also impact product consistency.
  • Political issues: Trade restrictions or geopolitical tensions can affect manufacturing supply chains. As a result, they can disrupt offshore outsourcing operations.
  • Language barriers and communication gaps may cause delays: Misunderstandings with foreign manufacturers can lead to errors in specifications. It might also delay production timelines.

9. Multisource outsourcing

Multisource outsourcing happens when a company uses more than one third-party service provider. As a result, they can cut costs and spread risk across different vendors. The typical workflow involves segregating tasks into smaller portions. Next, they are delegated to various service providers. This form of outsourcing is a viable option for those who want to remain flexible and resilient. As a result of this approach, they are able to acquire tangible advantages.

However, you need to know a caveat. This approach needs organized risk management strategies for handling multiple vendors.

Pros 

  • Risk diversification: Multiple vendors strengthen business continuity. Hence, there is less reliance on any one vendor.
  • Scalability and flexibility: Businesses have the ability to quickly adapt and adjust their IT and supply chain sizes.
  • Access to specialized skills: Such sectors may include both network management operations and data center operations.

Cons 

  • Complex vendor coordination: Coordinating multiple providers challenges efficiency. Hence, it can be an obstacle to effective risk management.
  • Inconsistent service quality may disrupt operations: Varying standards might be followed by different service providers. Therefore, it could affect the flow and efficiency of work.
  • Increase in IT security risks: These issues increase with multiple vendors. It becomes challenging to ensure that all vendors comply with the data protection regulations.

10. Operational Outsourcing

Do you have non-core operations within the business? Then it might be a good idea to delegate these to expert external vendors under operational outsourcing. As a result of this step, you can optimize costs and remain firmly competitive. This has become an attractive proposition for many sectors like logistics and service industries.

Here, you would be delegating office-based work and back-office operations to external providers. With this move, you get the time to focus on core competencies. By outsourcing routine operations, businesses enhance efficiency and optimize resources.

Pros 

  • Better Efficiency: With this approach, businesses can ensure streamlined operations. Also, they can enhance their capabilities on strategic projects.
  • Incredible Scalability: You don’t have to hire extensively or maintain full-time staff for workforce growth in areas like administrative tasks and HR.
  • Greater Expertise: External vendors help meet contractual obligations with specialized knowledge. For example, in back-office operations, the vendor might have tools and workflows to start delivering value from day one of the engagement.

Cons 

  • Impact on business control: Dependency on outside vendors may affect the control of the business.
  • Data security risks: This is one of the many types of outsourcing where vendors need to comply with strict regulations and laws. This is needed to avoid security risks to data.
  • Employee Morale: It might impact the morale of team members aligned with such non-core operations.

These were the different types of outsourcing by function. Now, let us look at types of outsourcing by location.

What are the Various Forms of Outsourcing by Location?

Businesses may also choose to outsource projects or business processes based on the location of the vendor. Here, we look at 3 types of outsourcing by location, each with its own set of traits and advantages.

1 – Onshore Outsourcing

This type of model entails contracting service providers within the same nation. They offer regulatory compliance and seamless communication. An example of this model is when a Texas-based company outsources finance work to a New York-based vendor. Since they are already aware of the country-specific laws and compliance requirements, this type of professional outsourcing will be better than offshore or nearshore outsourcing.

Pros 

  • No language barriers: Since both the home office and outsourced office are in the same nation, there is no issue of culture fit, language, or time zone.
  • Quick response times: Vendors can quickly work on revisions and changes. It also facilitates real-time collaboration.
  • Strong quality control and compliance: Vendors offer better data security and abide by domestic regulations with this form of outsourcing.

Cons

  • Higher labor costs: The regional advantages can be quickly negated by the high cost of vendor fees in developed countries like the US and Canada.
  • Limited cost savings: The labor cost of accessing onshore talent is way too high as compared to an offshore, nearshore, or hybrid outsourcing model.
  • Smaller talent pool: Since the focus is only on the same onshore country, the pool of available specialists goes down tremendously.

2 – Offshore Outsourcing

This is one of the more prevalent types of outsourcing, often structured as an Offshore Development Center (ODC). In this approach, the client contracts non-critical services to providers in distant countries. For example, a US-based company might prefer delegating software development, cloud services, and cybersecurity solutions to capable experts in Vietnam. The country offers highly skilled IT specialists and competitive pricing. As a result, it can pass on operational efficiency and remarkable cost savings to the client company. The result is faster project execution and high-quality IT solutions that are at par with US-based development teams.

Pros 

  • Significant cost reduction: This outsourcing method makes use of lower labor and operational expenses. As a result, it maximizes business profitability.
  • Access to global talent: Companies can tap into a wide talent pool in countries like Vietnam. Its developers present incredible expertise in advanced technology.
  • 24/7 operations: Continuous workflow happens in the case of time zone differences between the two nations. As a result, it leads to accelerated time-to-market and improved customer support.

Cons 

  • Cultural and language differences: Some vendors may lack fluency and context around English, which tends to impact collaboration.
  • Likely compliance challenges: Different countries have distinct regulations. Hence, the client needs to be vigilant on legal frameworks and data security laws to ensure compliance.
  • Quality control issues: Differences in work standards and oversight limitations might lead to quality problems.

Learn more: Case studies on offshore outsourcing

3 – Nearshore Outsourcing

In this format, the client engages service providers in neighboring or nearby countries. The aim is to balance cost efficiency and operational advantages. They will most probably be within overlapping time zones and share similar cultures. Due to the geographic and cultural proximity collaboration and time zone barriers go down significantly.

An example of nearshore is when a Detroit-based auto parts company might delegate supply chain operations to a provider in Monterrey, Mexico. They will handle inventory and warehousing. Plus, they will look after cross-border transportation. When the client uses their strategic location and low operational costs, it can bring down shipping times and decrease customs complexities.

Pros: 

  • Time zone alignment: Minimal work hour differences enable real-time communication. It also promotes project management working in sync across borders.
  • Easier collaboration: The client benefits from shared cultural nuances and geographic proximity. It results in smoother interactions.
  • Lower costs than onshore: This format allows for significant cost savings compared to local/domestic hiring.

Cons: 

  • Higher costs than offshore: This type of professional outsourcing is more expensive than distant outsourcing locations.
  • Limited talent pool compared to offshore: Fewer available professionals than in massive talent markets like Vietnam.
  • Dependency on regional stability: Political and economic fluctuations can potentially disrupt outsourcing partnerships and operations.

Which are the Emerging Models in Outsourcing

The business operations and demands are shifting a lot. Hence, the existing models in outsourcing are evolving. This helps new types of outsourcing models cater to new-age business needs. We see the 3 main formats coming up –

1 – Cloud-Based Services

2 – Managed IT Services

3 – BOT Outsourcing

Let us check out their respective characteristics:

Model Description Pros Cons
Cloud-Based Services Businesses subscribe to cloud solutions instead of purchasing expensive licenses. Lower installation and setup costs (SaaS). Faster development (PaaS). Scalable computing resources (IaaS) Data privacy concerns (SaaS). Vendor lock-in risks (PaaS). Requires skilled technicians (IaaS).
Managed Services Third-party providers handle IT systems and infrastructure under a subscription model. Cost savings on IT infrastructure. Expert support available 24/7. Scalable IT resources based on business needs. Loss of direct control. Hidden fees for additional services. Business dependence on external providers.
BOT (Build-Operate-Transfer) Outsourcing A vendor sets up operations, manages workflow, and later transfers ownership to the client. Reduces financial and operational risks. Speeds up market entry. Ensures smooth transition post-handover. High initial investment. Challenges in transferring operations back. Limited authority during early stages.

How to Select the Right Type of Outsourcing?

You need to be careful when picking the ideal outsourcing format. Your due diligence will help ensure long-term success in the vendor partnership. These are some unmissable factors when choosing from the different types of outsourcing:

1. Cost vs. Value Consideration

Outsourcing cost considerations go beyond labor savings. Hence, businesses must assess the total cost of ownership. These may include infrastructure costs. It may also include hiring and training. You can compare nearshoring vs. offshoring. With this step, you will be able to discover the ideal balance between cost efficiency and service quality. A well-structured outsourcing strategy maximizes business ROI.

2. Business Goals and Scalability

You can align outsourcing to long-term objectives for sustainable growth. Professional outsourcing services are adaptable. Hence, companies can upscale operations effectively. An example is the case of IT outsourcing. Their skills let companies expand their digital abilities without incurring heavy capital. You must adapt well by selecting the best forms of outsourcing. This move will dictate long-term success.

3. Risk Management and Compliance

Cybersecurity in outsourcing is a serious issue. This is especially applicable when dealing with sensitive information. Vendors’ security controls, e.g., ISO 27001 and SOC2 outsourcing compliance, need to be assessed by the companies to limit risks. Clear responsibility for protecting data should be outlined in Service Level Agreements (SLAs). In this manner, intellectual property can be protected, and regulatory compliance can be ensured.

4. Talent Pool

Global talent acquisition will determine your choice of an outsourcing partner. Hence, businesses must examine whether the chosen location provides skilled professionals in their industry. This will help them pick one out of the various types of outsourcing. As an example, you can opt for managed services for long-term success. They offer access to specialized expertise across IT outsourcing in Vietnam, India, and Eastern Europe. Additionally, for finance outsourcing, you can opt for Poland and Mexico.

5. Cultural Fit

Successful collaboration stems from effective communication among in-house teams and outsourced vendors. For this, you may consider language skills and cultural fit in determining nearshoring vs. offshoring. Make sure that you facilitate regular check-ins and shared working spaces within these models.

6. Tech and Infrastructure Support

A solid technology base is critical to successful outsourcing engagements. Cloud-based outsourcing boosts productivity by offering flexible IT resources. Hence, companies must evaluate the technology infrastructure of an outsourcing provider and its cybersecurity measures.

7. Time Zone Differences

Offshoring offers cost advantages. However, time zone disparities can impact real-time collaboration. Remote workforce management strategies mitigate challenges for your business. Examples of these tactics may include overlapping work hours and asynchronous communication.

8. Communication Ease

Businesses working with offshore vendors must prioritize clear documentation. Also, they should have structured communication processes. Multilingual support and digital collaboration tools are essential. They can further streamline workflow between the two parties.

9. Legal and Regulatory Compliance

Strict regulatory standards govern outsourcing agreements. Therefore, you should check if they abide by norms like ISO 27001, which is essential for data protection in IT outsourcing. Do try to partner with outsourcing providers familiar with international regulations. Doing so will offer total peace of mind.

10. Vendor Credibility Check

A provider’s track record significantly influences outsourcing success. Hence, your firm should evaluate vendors based on past performance and industry expertise. Managed services with proven experience in cybersecurity in outsourcing to minimize operational risks. As a result of this due diligence, businesses can form strategic partnerships that drive long-term value.

Case Studies on Outsourcing Success

1. Slack Offshoring: Global Talent Access and Cost Savings

The US-based workplace communication app is one of the best examples of outsourcing success. They hired a Canadian firm under the nearshoring model to develop their website and web and mobile apps. Due to the app design outsourcing, it was able to access a third-party talent pool that helped it get a first-rate UI/UX design. As a result of this partnership, it now has 200,000 paying users and a $2.8 billion valuation.

2. Forcht Bank: Outsourcing Mission-critical Security Infrastructure

This is one of the good IT outsourcing case studies. The community bank entered into a partnership with BlueVoyant for an outsourced SOC. The Security Operations Centre enabled cloud-based managed services on a hybrid cloud model. With it, they wanted to put in place the same stringent security measures that are seen in larger banking institutions.

As a result, they can deploy services, security and infrastructure comparable to larger institutions.  Due to this approach, the bank is able to protect customer data. Also, they can meet regulatory norms against cyber threats that are growing in sophistication and intensity.

Final Thoughts

Outsourcing is a smart business decision for businesses that need a cost or talent advantage. We took a look at the different types of outsourcing models and covered some emerging options as well. We also saw how to pick an appropriate outsourcing partner for your specific needs. The case studies provide ample evidence of the proof of success associated with such partnerships.

Connect with Saigon Technology if you are searching for a competent IT outsourcing partner. We can drive growth momentum for your business.

Content manager
Thanh (Bruce) Pham
CEO of Saigon Technology
A Member of Forbes Technology Council

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