What is Outsourcing?
Outsourcing is the delegation of tasks or jobs from internal production to an external entity (such as a subcontractor). Most recently, it has come to mean the elimination of native staff to staff overseas, where salaries are markedly lower. This is despite the fact that the majority of outsourcing that occurs today still occurs within country boundaries, especially in North America. It became a popular buzzword in business and management in the 1990s. Where functions previously performed by an organisation are supplied under contract from a third party. Buying goods or services instead of producing or providing them in-house. While outsourcing is not exactly a new innovation, the shifts that have occurred recently in this space are worth noting. As the need for e-learning moves higher up on the IT and corporate training agendas, organizations are wont to take on the IT management burden of implementing a learning management system (LMS). The concept of taking internal company functions and paying an outside firm to handle them. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including telemessaging and call centers . Outsourcing is the wave of the future. A long-term, results-oriented relationship with an external service provider for activities traditionally performed within the company. Outsourcing usually applies to a complete business process. It implies a degree of managerial control and risk on the part of the provider. The transfer of components or large segments of an organization's internal IT infrastructure, staff, processes or applications to an external resource such as an Application Service Provider.
OFFSHORING DEFINED
No commonly accepted definition of "offshoring" exists, and the term has been used to include various international trade and foreign investment activities. Services that U.S.-based organizations purchase from abroad are considered imports. They may also be linked to U.S. firms' investments overseas -- for example, U.S. firms may invest in overseas affiliates as a replacement for, or as an alternative to, domestic production. In recent years, services offshoring has been facilitated by factors, such as the Internet, infrastructure growth in developing countries, and decreasing data transmission costs. Organizations' decisions to offshore services are influenced by potential benefits such as the availability of cheaper skilled labor and access to foreign markets, and by risks, such as geopolitical issues and infrastructure instability in countries that supply the services. "'Offshoring' of services generally refers to an organization's purchase from other countries of services that it previously produced or purchased domestically, such as software programming or telephone call centers ," GAO said.
NEARSHORING DEFINED>
Nearshore outsourcing, a form of offshoring, is the term used to refer to the practice of getting work done or services performed by people in neighboring countries (e.g. Canada, Mexico) rather than in your own country.
INSOURCING DEFINED
The act of bringing together a function that was performed outside the organization (outsourced) to being performed inside the organization.
The opposite of outsourcing, that is, a service performed in-house. It is a reaction to outsourcing that conjures up visions of employees aggressively defending their core competencies against cost-cutting senior managers and third party providers.
Outsourcing can be BPO Outsourcing, Process Outsourcing, Offshore Outsourcing, Call Center Outsourcing etc.
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