There are many reasons why corporate leaders choose to outsource a company process. These factors include market pressures, economic conditions, the type, age, and size of the organisation. Startup businesses, for instance, frequently have to outsource back-office and front-office tasks because they lack the internal resources to do them. If an established business discovers that a third-party service provider might handle the activity more effectively or more affordably than it could, it may decide to outsource it. Enterprise leaders are advised by management gurus to identify tasks that can be outsourced and then assess if doing so makes sense. If so, the business must go through the process of choosing the appropriate vendor for the job as well as moving it from internal resources to the external supplier. Given that switching to an outsourced provider typically affects staff, established procedures, and current workflows, this calls for a large level of change management. The decision to use an external provider has an impact on the organization’s finances as well. This is true not only in terms of the costs that are transferred from internal to external suppliers, but also frequently in terms of corporation taxes and reporting requirements. To facilitate a seamless transfer of work to the outsourced provider, the business might also need to make an investment in new technology. The scope of the function being outsourced and the maturity of the technology infrastructure in place at both businesses determine the extent and expense of that technology. Enterprise executives often begin this process by deciding which individual tasks or business procedures to outsource in order to save costs, increase flexibility, boost performance, and reallocate resources to their core business competencies. The next question for business owners is whether one vendor should handle all of the outsourcing work or if hiring different providers for diverse jobs will yield the greatest results. For instance, a business might opt to outsource the majority of its HR duties and then either engage one supplier to handle all the outsourced tasks or contract with two different providers, one for payroll and the other for benefits administration.

These factors ought to result in a list of specifications and a thorough scope of work for outsourcing. These are used by organisations to create a request for proposals (RFP) that they then share with suppliers to see whether they can meet the specifications, at what cost, and with what value-adds.