Levels of Outsourcing

Outsourcing of services can be classified into five broad categories, based on their contribution to value and their skill requirements:

1.Data entry, digitization, conversion, transcription.

At the lowest end of the value and skill chain are back-office functions such as data entry, digitization, and conversion activities, and basic clerical services that do not require domain knowledge or specialized expertise. One of the most common of these is transcription services, whereby dictations by doctors or lawyers are converted to written medical or legal records. 

2.Rule-based processing and simple support services.

Next in the value chain are teleworking services, which involve rule- based processing and simple voice and on-line customer relations services, based on rules set by the client. These include call-center services, email-processing, data processing, billing and payments, account opening, and screening of credit card applications.

3.Activities involving problem solving and decision making.

Slightly higher up the value chain are activities that involve problem solving and decision making, such as developing solutions for improving processes or streamlining systems. 

4.Complex multimedia support services .

Next on the value chain are teleworking services that involve direct interaction with customers and more elaborate transactions with the client, but moving beyond pure voice-based support to mixed media-based support services and beyond writing routine software applications to the remote management of sophisticated networks. These include activities like web support, telemarketing, providing customer help desks, technical back office processing, e-customer relationship management, website design, software development for entire business processes, and hardware support services. 

5.Specialized services requiring domain knowledge and skills.

At the top end of the value chain are services that involve domain expertise and specialized skills. These include research and engineering services such as 3-D modeling, drawing up technical specifications for tenders, plant engineering, piloting prototypes, testing and optimization, redesigning for improving cost-performance ratios, financial analysis, risk management, equity research services, and consulting and advisory services.