On-demand outsourcing

On-demand outsourcing is a trend in outsourcing wherein major internal operations processes of a company are being shifted to a provider that is paid for by the number of transactions involved. The business transferring the services pays for the quality, special skills and the competence of the service provider's employees. There has been an expansion of the outsourcing concept to include on-demand outsourcing. This refers to the process undertaken by business managers to adopt an outsourcing policy that ensures that the specific business and supplies including technical manpower are accessed as the need arises. It focuses a business strategy to improve its goods and services and to drive a business towards quality improvement.

The reasons for general outsourcing can be summarized in following factors: the rising wages of the domestic worker, or companies wish to gain access to the exceptional capability. The risk of outsourcing service is normally assumed by the outsourcing service provider, not by the companies themselves. Nowadays, outsourcing on demand is preferred by many because of its ability to reap diverse sources of material and labour supply. Under this strategy, the driving motivation is the desire for business diversification and quality.

This type of outsourcing becomes more popular as service providers may not be able to outsource their employees on a daily basis owing to high demand and workload. Therefore, the service provider has to consider the order of resource allocation into different departments, according to the needed level and price offset by the companies. It is common that the companies will always outsource for their core business.

The most important difference between this type of outsourcing and general outsourcing is the critical transfer of ownership of the organisation from to a service provider. In an ideal on-demand outsourcing, there is an important passage of factors of production from the owner to the service provider. It encourages a system where business exists in a simple but comprehensive relationship. In some cases, the employees and entire human resources is transferred to the service provider. Notably, in order to undertake a strategic outsourcing, there are conditions that have to be met. Firstly, it should include the creation of a competitive advantage; this is an important element that should form the basis of adopting this type of outsourcing. Secondly, on-demand outsourcing demands that the managers spend more time in streamlining the activities that are important for business success. In addition, they need to undertake repositioning of the business in the marketplace or achieve a dramatic increase in market share. When these elements and motivating factors are met, it will make the outsourcing strategy a competitive edge.

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