What Are the Most Outsourced Services

Outsourcing has undergone significant evolution since its inception in the late 20th century. Initially motivated by cost-saving objectives, it primarily involved outsourcing low-priority tasks to achieve financial efficiencies. However, as time progressed, businesses recognized its broader potential to access global talent, optimize operations, and bolster competitiveness. This realization prompted companies to expand outsourcing beyond peripheral functions, gradually integrating it into non-core tasks. Today, the landscape has shifted further, with even semi-core and core tasks being outsourced to gain strategic advantages and market agility. 

As outsourcing continues to evolve, the distinction between core, semi-core, and non-core functions is becoming increasingly blurred. Rapid advancements in technology and globalization have enabled outsourcing partners to offer specialized expertise from any part of the world. Their scopes of services include those traditionally considered core to a company's operations. Furthermore, as businesses prioritize agility, innovation, and cost-effectiveness, they are increasingly willing to outsource functions that were once deemed essential in-house.

In this blog, we explore the most commonly outsourced services that span across the categorized task segments of core, semi-core, and non-core functions.

Non-Core Tasks

Non-core tasks in a business are peripheral activities that are not central to the company's primary objectives or core competencies. By offloading non-core tasks, businesses can focus their resources, time, and energy on strategic initiatives and activities that drive value creation, innovation, and competitive advantage in their respective fields.

Non-core tasks vary from business to business based on industry, size, and organizational priorities. What may be peripheral to one company could be fundamental to another. Factors such as market demands, regulatory requirements, and internal capabilities influence the classification of tasks. Additionally, outsourcing and technological advancements further shape the definition of non-core tasks, as companies seek to optimize operations and focus on activities that align closely with their strategic objectives and core competencies.

Michael Corbett, Chairman of the IAOP, quoted “The real power of outsourcing going forward is that it increases an organization’s core capacity for change and growth. The business challenges over the next decade are going to be very different than anything we’ve seen so far and the companies that weave a powerful network of global partners through outsourcing will be the winners”.

Most Commonly Outsourced Non-Core Tasks

Businesses outsource non-core tasks to focus on their primary objectives. Some of the most commonly outsourced non-core tasks include:

Administrative Tasks  (Data Entry and Update, Appointment Scheduling, Transcription, Travel Arrangements, etc.)

Most of the administrative tasks are straightforward and may only require completion once or periodically, not justifying the need for full-time employees. These tasks are, therefore, non-core and can be outsourced to external providers for best results. 

Businesses cutting across industries outsource administrative tasks like data entry and updates, appointment scheduling, transcription, travel arrangements, etc. For example, most data update tasks are periodic tasks. These include updating customer contact details, inventory levels, financial records, or market trends, which can either be weekly, monthly, or quarterly. 

Human Resource Functions ( Staff Augmentation, Employee Benefit Verification etc. )

Some human resource tasks are time-consuming and long drawn. Staff augmentation is one such task. It involves hiring temporary or contract workers to address short-term needs or project demands. While it is a crucial task, it can divert HR resources from strategic initiatives like employee development and engagement.

This makes HR functions among the most commonly outsourced services. Outsourcing these tasks eliminates the need for in-house HRs to commit themselves to on-demand tasks like this. Also, outsourced staff can be scaled up or down as needed, thus exempting the in-house team from the uncertainties of staff augmentation. 

Customer Service and Support (e.g., Call Handling, Email Inquiries, Lead Generation, Appointment Setting, etc.)

Call handling, email inquiries, and lead generation involve multi-layer workflows which can be repetitive and time-consuming tasks. For instance, responding to return policies, updating on cancel status, etc., are quite straightforward tasks that consume a lot of staff's time, which could have been devoted to solving more complex customer issues. Likewise, high call volumes during peak hours invariably lead to delays and inefficiencies. Both these drawbacks are beyond the control of an in-house team.

External providers often excel in handling email inquiries and calls due to specialized experts, fine-tuned processes, and the use of the best tools. They are specialists and have the right know-how to weed out common inefficiencies associated with these tasks.  

Marketing (Social Media Management, Campaign Tracking,  Website Development, Content Writing, etc.)

Every business depends heavily on marketing to grow. But maintaining a marketing department in-house can, at times, become counterproductive. Coordinating cross-functional efforts, staying abreast of trends and technologies, and changing consumer behaviors can become too difficult to manage. Instead, outsourcing marketing as a whole or a subset of marketing can help businesses have better control.

Outsourcing social media management and campaign tracking brings specialized expertise to the table. These experts possess in-depth knowledge of platforms, business-to-business and business-to-customer content strategies, and analytics tools, which can be used for optimized and consistent performance. External vendors are known to craft intuitive interfaces that boost user engagement and make navigation seamless. Their expertise reinstates outsourcing as a proven way of maximizing marketing ROI.

Retail Support Services (Order Taking, Order Processing, etc.)

Some tasks are considered non-core because they are essential but do not directly contribute to primary revenue-generating activities and come in the way of core business functions. Order-taking in the retail sector is one such task. It involves accurately recording orders, safeguarding the data, and ensuring timely delivery. The task is typically conducted through phone calls, online platforms, or mobile apps.

Large ecommerce retailers require these services to handle high volumes of orders efficiently. However, managing large order volumes can be challenging due to coordination issues, potential errors in order processing, and ensuring consistency in service quality during peak demand periods. So, such non-core tasks are outsourced. 

Healthcare Support Services (Appointment Scheduling, Claims Follow-Up, Patient Collections, etc.)

Even though regarded as non-core tasks, patient appointment scheduling, claims follow-up and patient collections are a few functions that indirectly contribute to the revenue health of medical businesses. These are administrative functions that do not directly contribute to medical care delivery. But any amount of inefficiency in the same can result in revenue leakages and customer dissatisfaction. So, outsourcing these tasks makes perfect sense.

Healthcare providers outsource these tasks to ensure effective and professional handling by specialized providers. Professional firms have the right expertise and technologies that they leverage exclusively on this task, ensuring complete effectiveness. For instance, outsourcing appointment scheduling ensures that the process is run in a more organized and standardized way. It exempts a medical practitioner from non-core functions of following up with patients about their upcoming appointments or any rescheduling requests. 

Mortgage and Factoring (Data Entry and Validation, Credit Checks, Appraisal Coordination, etc.)

Data entry, data validation, and credit checks are considered non-core tasks in mortgage and factoring because they do not directly contribute to the strategic decision-making or revenue-generating activities of these businesses. Instead, they are routine administrative functions that ensure accurate and complete data, which can be efficiently handled by specialized external providers.

For example, appraisal is an important prerequisite in mortgage and involves backend tasks like scheduling appraisals, managing communications between appraisers and clients, and ensuring the timely completion of reports. Outsourcing appraisal coordination is beneficial because specialized service providers can handle these tasks more efficiently. Most importantly, it will lighten the administrative tasks burden of appraisers who have more complicated functions to deal with. These advantages make mortgage and factoring as one of the top outsourced services.

Semi Core Tasks

Semi core tasks in businesses refer to activities that are important but not central to the core operations of the organization. These tasks support the primary business functions and contribute to overall efficiency and effectiveness, but they do not directly generate revenue or define the company's main value proposition.

Although semi-core tasks are not the main revenue generators, neglecting them can lead to inefficiencies and disruptions in core activities. For instance, without reliable IT support, technical issues could halt production. Similarly, without effective procurement practices like vendor and catalog management, the business might face supply chain disruptions, leading to delays in production and delivery,  impacting overall performance. Thus, semi-core tasks are integral to maintaining the operational health and efficiency of a business. Outsourcing semi-core tasks is common, allowing businesses to focus on their core competencies while leveraging specialized expertise for these essential functions. However, carefully managing these tasks is necessary to ensure they align with the company’s strategic goals and contribute to overall operational efficiency.

Most Commonly Outsourced Semi Core Tasks

Semi-core tasks are essential for supporting core operations but are not the primary business activities. The most commonly outsourced semi-core tasks include:

IT Support Services (Network Management, Cloud Services, Data Backup and Disaster Recovery, etc.)

Managing IT support services in-house presents numerous challenges for businesses. Firstly, it requires substantial investment in infrastructure, technology, and skilled personnel, which can strain budgets and divert resources from core business functions. Maintaining a competent IT team also necessitates ongoing training and upskilling to keep pace with rapidly evolving technologies.

Outsourcing IT tasks frees up internal resources. From troubleshooting software glitches to fixing hardware issues, the external team keeps operations running smoothly and minimizing downtime. It also offers round-the-clock assistance for businesses operating globally or employees working in different time zones. Outsourcing helps implement robust security measures, such as firewalls, antivirus software, and regular security updates.

Procurement Services (Vendor Selection, Negotiation, Contract Management, etc.)

Effective procurement is crucial for businesses to operate efficiently, control costs, and maintain quality standards. It involves managing the sourcing, purchasing, and supply chain activities to ensure the timely delivery of quality goods and services at optimal prices. However, procurement is an umbrella term for multiple backend tasks, such as accounts payable management, the procure-to-pay process, purchase order processing, etc. Maintaining a dedicated team for these is a must for every organization but also a costly proposition.

Outsourcing is a better option when compared to having an in-house team. It streamlines the long-winded procurement backend tasks, ultimately aiding businesses to obtain goods and services at the best possible prices. This involves negotiating contracts with suppliers, leveraging economies of scale, and finding cost-saving opportunities. Outsourcing to vendors who have their bases across diverse locales opens access to a broader supplier base, local market knowledge, and regulatory expertise. 

Sales Operations (Lead Management, Sales Analytics, etc.)

When sales succeed, it's often a testament to effective sales operations. The sales department is responsible for optimizing sales processes, managing data and analytics, implementing sales enablement tools, and ensuring alignment between sales, marketing, and other departments. Strategic initiatives, such as territory planning, sales forecasting, and performance tracking, are essential for long-term business success.

However, many businesses outsource certain aspects or the whole of their sales operations for various reasons. One of the main reasons is outsourcing provides access to specialized expertise and resources that may not be available in-house. For example, businesses may partner with a third-party firm with expertise in data analysis to gain deeper insights into their sales performance. Moreover, outsourcing is a one-stop shop for end-to-end sales support services, including lead generation, customer relationship management, prospecting, and order processing, allowing businesses to focus on their core competencies. All these factors make sales operations feature among the most commonly outsourced services.

Supply Chain and Logistics Services (Warehousing, Inventory Management, Distribution, etc.)

The supply chain is not just about moving goods from point A to point B; it's about optimizing every step to maximize efficiency, minimize costs, and enhance customer satisfaction. This may look simple, but it requires a well-balanced expert team and experience to handle. To tackle this, many businesses opt to outsource supply chain and logistics services to external providers.

Outsourcing supply chain and logistics has several advantages. It ensures that products reach customers on time and in pristine condition. With the help of advanced predictive analytics tools and deep human expertise, the external team mitigates risks such as disruptions in the flow of materials, natural disasters, political instability, or economic fluctuations. Outsourcing also enables businesses to expand into new markets, both domestically and internationally.

Quality Assurance and Testing Services (Software Testing, Product Inspections, etc.)

Some tasks may seem repetitive and extremely manual, but they require attention to ensure the smooth functioning and success of businesses. Among these critical tasks are quality assurance and testing. They ensure that the end product meets the required standards, specifications, and user expectations.

With QA and testing being the sole focus areas, an external team is the right fit for product testing in an effective manner. For example, an external software testing team can identify defects, errors, or discrepancies in the early stages of development, preventing them from escalating into costly issues later on. Similarly, outsourcing teams pay particular attention towards identifying product issues that can potentially trigger security breaches, or regulatory non-compliance, which could damage a company's reputation and finances.

Content Strategy and Management (Content Planning, Content Development, etc.)

Businesses now require blog posts and social media updates to videos and whitepapers to stay competitive. Managing this content efficiently requires expertise in content organization, version control, and distribution across various platforms. Also, it is essential to ensure the content is easily accessible, up-to-date, and relevant. To manage all these, businesses find outsourcing as a cost-effective option.

Content professionals bring in-depth knowledge of industry trends, audience preferences, and content optimization techniques. For example, they excel in crafting compelling narratives tailored to target audiences, maximizing engagement and conversion rates. By outsourcing content management, businesses can leverage specialized skills, streamline workflows, and maintain a consistent brand voice across diverse channels.

Cybersecurity Services (Threat Monitoring, Incident Response, etc.)

Businesses handle vast amounts of sensitive information, such as customer data, financial records, and intellectual property. A security breach of this data can severely damage a company's reputation, eroding customer trust and leading to a loss of business. But, managing this in-house requires advanced infrastructure, up-to-date knowledge, and specialized skills. Thus, businesses rely on external providers to handle cybersecurity for businesses.

External providers have dedicated experts who stay current with the latest cybersecurity threats and technologies to mitigate the same. Cybersecurity providers offer round-the-clock monitoring and rapid response services, ensuring that threats are detected and mitigated promptly, even outside regular business hours. They also provide proactive threat intelligence and risk management services, helping businesses stay immune to potential threats and vulnerabilities.

Training and Development (Employee Training Programs, Leadership Development, etc.)

Staying ahead of competitors often hinges on continuous learning and adaptation. Well-trained employees are more efficient and productive. Training and development initiatives equip staff with updated techniques, tools, and best practices. However, offering these services in-house will cost time and money for businesses. Hence, many businesses outsource these functions to an external provider.

With outsourcing, businesses can save on expenses such as hiring dedicated trainers, developing training materials, and investing in training facilities. It also provides advanced technology platforms and tools that enhance the learning experience. As a result, outsourcing training and development services helps employees stay competitive, grow skills, and adapt to industry changes effectively.

Core Tasks

A core task in a business refers to a fundamental activity or function essential for its operations and success. These tasks are typically directly related to the business's mission, goals, and value proposition. While specifics vary across industries, core tasks typically encompass activities central to product or service delivery, customer engagement, and organizational sustainability.

These activities ensure the creation and delivery of goods that meet customer needs and expectations. For service-oriented enterprises, core tasks may involve client consultation, service provision, problem-solving, and relationship management, fostering client satisfaction and loyalty. Core tasks often require coordination across departments, effective communication, and strategic decision-making to ensure alignment with business objectives. To reach that stage, businesses need to streamline the workflows to break down the department siloes, facilitating seamless communication. Outsourcing partners often assign dedicated project managers to coordinate between departments, ensuring effective communication and alignment. Centralized reporting and documentation provided by vendors enhance transparency and accessibility of information. These capabilities build a strong case for core tasks outsourcing for businesses to achieve sustainable growth.

Most Commonly Outsourced Core Tasks

Here are some commonly outsourced core tasks across various industries:

Manufacturing and Production (Production, Assembly, etc.)

An efficient and cost-effective production process requires substantial investment in infrastructure, equipment, and skilled labor. This can be particularly challenging for small and medium-sized enterprises (SMEs) with limited resources. Even large enterprises find it difficult or costly to manufacture products in-house.

Outsourcing enables companies to capitalize on economies of scale and reduce labor expenses by operating in regions with lwer wage rates. External partners may also benefit from access to raw materials at lower costs in specific locales. Consequently, this facilitates the delivery of products at a lower cost compared to in-house production. Apple outsources manufacturing tasks such as assembly, packaging, and component production to countries like China, India, and the Philippines. This strategy capitalizes on lower labor costs and specialized production facilities, enabling Apple to maintain a competitive price point for its products while benefiting from global expertise in manufacturing processes.

IT Services (Software Development, Project Management, etc.)

Software development is a highly specialized field that requires specific expertise and resources are often not readily available in-house. Many businesses, especially those without an in-house development team, rely on external expertise to bring their digital ideas to life.

Outsourcing IT services can encompass a range of tasks, including web development, mobile app development, database management, system integration, and technical support. Whether it's niche programming languages (Python, Java, etc.), emerging technologies, or industry-specific knowledge, outsourcing provides access to a diverse range of skills and experiences.

End-to-End Finance and Accounting Services (Accounts Payable, Accounts Receivable, Bookkeeping, etc.)

Accounting, bookkeeping, payroll, tax preparation, and financial reporting are complex and time-consuming business processes. Businesses find it challenging to handle in-house due to the need for specialized skills and expertise, evolving regulatory requirements, and technological advancements. To address these challenges, companies opt to outsource these tasks. The main reason businesses outsource is that external partners offer end-to-end accounting services, from bookkeeping and payroll processing to tax preparation and financial reporting, while maintaining absolute compliance with every pertinent regulation.

Outsourcing offers expertise in specialized areas such as compliance with evolving tax regulations, efficient payroll management, inventory accounting, and advanced financial reporting. It also ensures that tasks are handled by individuals with the right skill set. External service providers pay special attention towards compliance with tax laws, financial reporting standards, and other regulatory obligations, reducing the risk of non-compliance and associated penalties.

Research and Development (R&D) (Innovation, Product Development, etc.)

Innovation is one of the key success drivers of every enterprise. But, conducting effective research and development (R&D) can be resource-intensive and time-consuming. Outsourcing R&D functions has become increasingly common as businesses seek to leverage external expertise, reduce costs, and accelerate product development cycles.

Outsourcing R&D tasks such as market research, product design, prototyping, and testing allows companies to tap into specialized knowledge and experience. External partners often bring fresh perspectives and insights, which can spark innovation and drive product differentiation in competitive markets.

Data Analytics and Business Intelligence (Data Analysis, Reporting, etc.)

Today, businesses have a vast amount of data at their disposal. Unfortunately, most of them do not put the repository to its best use, either due to a lack of data comprehension abilities or tools. In-house teams often have a linear approach toward data analysis bound by their niche industry expertise. This limits their abilities to harness data analytics and business intelligence (BI) capabilities effectively.

External partners often have dedicated teams of data scientists, statisticians, and analysts with expertise in data mining, predictive modeling, and machine learning techniques. They stay abreast of the analytics trends that disrupt every industry, which they use to update their skills as an ongoing process. Their expertise and sophisticated analytics tools and methodologies allow businesses to use their data best without significant upfront investments in infrastructure and talent development. Thus, outsourcing can be a viable option for businesses.

Legal Services (Regulatory Compliance, Contract Drafting, Intellectual Property Protection, etc.)

Adherence to laws, mitigate risks and safeguard assets, fostering a conducive environment for sustainable growth. However, maintaining an in-house legal department capable of handling diverse legal matters can be cost-prohibitive for many organizations. It also has risks such as legal liability, potential conflicts of interest, and the need to constantly update skills and knowledge.

Outsourcing legal services offers a solution to access experts across various domains of law. External legal firms or consultants can provide comprehensive support in regulatory compliance, contract drafting and review, IP protection, and dispute resolution, among other areas. This ensures businesses proactively adapt their practices and policies to remain compliant and avoid potential liabilities.

Conclusion

Even a decade ago, a straightforward answer to the common question, “What is an outsourced service?” would have been delegating non-core tasks or functions to external third-party providers rather than handling them internally. However, outsourcing is growing so quickly that the distinction between core, semi-core, and non-core outsourced tasks is becoming increasingly blurred. As businesses recognize the benefits of outsourcing, they are more willing to outsource a broader range of activities. This trend is further facilitated by rapidly evolving technological advancements and communication tools, which makes it increasingly easier to manage and integrate outsourced services seamlessly. Today, many businesses, such as drop shipping, e-commerce stores, virtual assistant agencies, and online marketing, are fully outsourced. In the future, the list is expected to grow as outsourcing will encompass all types of tasks, from strategic core functions to routine operations.