Outsourcing White Paper

Outsourcing at HTI : Transaction Processing
Horizontech, Inc. provides corporate outsourcing through a combination of technical Internet expertise, paper handling and data capture expertise. Services offered include custom designed mailroom, image scanning and data capture solutions; electronic Internet based applications with hosting services.

There is nothing new about buying from outside suppliers. What is new is that businesses are increasingly buying services that they traditionally provided for themselves, from information technology to administrative support services. The shift is so pronounced - the Outsourcing Institute projects 35% growth in outsourcing expenditures - that the words "sourcing", "insourcing", and "outsourcing", unknown to the service arena ten years ago, have become standard terminology.

Today, an estimated 1.6 million U.S. firms are outsourcing strategic business functions to over 146,000 suppliers, with total expenditures estimated at $108 billion per year. The growth of outsourcing confirms the continuing shift in the way America does business:

Companies are focusing resources on their core competencies where they can provide unique value to their customers and can achieve preeminence.

With information technology and process improvements increasing the complexity, costs and skills required to accomplish routine tasks, companies are outsourcing such tasks to providers who have the expertise to perform them at lower costs and with greater value.

Companies are increasingly looking to suppliers that can leverage overseas labor supplies, creating a cost leverage without sacrificing quality, just as the manufacturing sector did decades ago.

This approach - focusing on core activities, selectively outsourcing others - crosses industry boundaries. For example, manufacturers use value-added distributors to increase customer responsiveness and supply-chain agility. Banks increasingly rely on third party partners to invest in new technology and optimize ever-shrinking technology life cycles. Software companies and airlines look to call centers to handle customer service. In all sectors, companies are eliminating outdated and bureaucratic back offices and outsourcing administrative functions to companies that specialize in that work.