Outsourcing Definitions

Outsourcing Definitions

Outsourcing Defined

OK, so you want to know what is outsourcing? In the broadest sense, almost everything in business is outsourced. Think about it. When a company buys parts from a supplier to build its own products, it is Outsourcing. When it hires a cleaning crew to clean its offices, it is out sourcing that service. When a construction firm hires a subcontractor, it is Outsourcing. When a corporation hires an executive search firm, it is Outsourcing that responsibility. Accounting, security services, advertising, IT networking, payroll services, legal counseling, market research, manufacturing (Apple doesn’t even build its own computers. That task is outsourced to a company you’ve never heard of.), insurance, landscaping, engineering and customer service—the list of Outsourcing is never ending. So what constitutes Outsourcing? Well, that depends on your point of view. To help structure our understanding of Outsourcing, here are three different definitions to consider:

 

Basic Definition:

Outsourcing is the transfer of any business function or service to external vendors, suppliers or consultants that was previously or potentially performed in-house. “The company’s entire business model was based on Outsourcing all of its operations to a variety of service providers.”

 

Tactical Definition:

Outsourcing is a business tactic to reduce long-term costs, liability and overhead by contracting out business processes to a specialized third-party. “The corporation is determined that Outsourcing its entire R&D department, it could save millions of dollars.”

 

Political Definition:

The collective Outsourcing of jobs overseas to offshore countries as a result of rising labor costs and the long-term legacy costs associated with economic and market factors. “U.S. companies have been Outsourcing IT jobs to India and China for the last ten years at the expense of customer service.”

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