'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.
Outsourcing and out-tasking
involve transferring a significant amount of management
control to the supplier. Buying products from another
entity is not outsourcing or out-tasking, but merely
a vendor relationship. Likewise, buying services from
a provider is not necessarily outsourcing or out-tasking.
Outsourcing always involves a considerable degree
of two-way information exchange, co-ordination, and
trust. Outsourcing is the act of obtaining services
from an external firm.
Offshore outsourcing
more and more takes the shape of Business
Process Outsourcing, where whole business
processes (such as support and development) are outsourced.
The client is usually free to choose who provides
the outsourced business processes, while stock markets
press the company to do more for less.
This requires that managers search
out the cheapest sources they can find. In countries
like India and China (primarily Bangalore in India),
companies like IBM, Microsoft, Hewlett Packard,
and Novell choose to get services from sub-contractors
in these countries or move many development and support
jobs there. Smaller businesses can also take advantage
of freelancing on the Internet to get smaller projects
done by offshore developers at minimum cost.
Turning over a narrowly-defined segment
of business to another business, typically on an annual
contract, or sometimes a shorter one. This usually
involves continued direct or indirect management and
decision-making by the client of
the out-tasking business.
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