Outsourcing (or contracting out) is often defined as the delegation of non-core Business Operations or jobs from Internal production to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that can be made for quality or financial reasons. A subset of the term (offshoring) also implies transfering jobs to another country, either by hiring local subcontractors or building a facility in an area where labor is cheap. It became a popular buzzword in business and management in the 1990s. ==Overview== Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider. 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. Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Outsourcing business is characterized by expertise not inherent to the core of the client organization. A related term is out-tasking: 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. ==The international context== With the rise of globalization, many companies are turning to either offshoring, offshore outsourcing or Global Sourcing. Offshore outsourcing more and more takes the shape of BPO, 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 cities like Bangalore and Chennai 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. This practice became even more popular after the Dot-com#Thinning_the_herd of the early 21st century. As many businesses struggled with cash-flow problems, many investors were leery of investing money in high-tech companies, which many felt were still vulnerable to the dot-com effect. Struggling to do more with less, companies looked for less expensive avenues of development and support. For the United States, India seemed like a perfect resource for these needs since many nationals spoke English language—a side-effect of several decades of England colonial rule. A company can hire an engineer in India, for example, for United States dollar10,000 a year whereas an equally qualified engineer in the U.S. could cost $60,000-$90,000 a year. A side effect of this practice led to the domestic unemployability of thousands of high-tech professionals, many of whom were new college graduates. Many of these new graduates studied high-tech fields specifically because a few years earlier, they were told there was an earnest need for people with the skills they actively acquired. Many companies required their employees to train their off-shore replacements, after which they were downsized (laid off). In practice, this trend has experienced mixed results. Some companies, which were required to hire off-shore talent by investors, reported communication barriers and high foreign personnel turnover rates. They would often ask for one thing, but be delivered a different item. Communication between onsite and offshore teams is a must. Attrition in the offshore company is another issue. One company in Pleasanton, California in the U.S. specializes in fixing jobs that were botched due to offshoring. Some companies report favorable results . One company said that the low cost of his Indian development team allows him to hire higher-paid American lead developers. Major companies doing outsourcing include Microsoft, Cisco Systems and IBM to name a few. Outsourcing, especially BPO (Business Process Outsourcing), has long been a factor in American business, but the trend is beginning to reach Europe. More outsourcing deals were signed there last quarter than in any single quarter since 2000. Most economists feel that it will inevitably remain a part of global trade. Outsourcing is not just related to the services sector. A lot of manufacturing of products is also outsourced to countries like China and Taiwan. Consumer products including clothes and computer hardware are manufactured in these countries due to cheap labor. These products in turn lead to a cheaper prices in the consuming nations. ==Politics== Outsourcing is an effect of globalisation. In the beginning of globalisation, many western businesses introduced their products in the eastern countries and reaped a lot of profit. The resource re-allocation which happens by outsourcing is a further consequence of globalisation. Countries that offer high-quality, yet cheaper labour include China, India, Russia and other eastern Europe and Asian countries. A much higher turn out of qualified engineers than their western counterparts in the recent past has aided these countries in providing a high-quality labour force. The Governor of the state of California in the U.S., Arnold Schwarzenegger, vetoed a bill that would have barred state contractors or agencies from outsourcing jobs offshore. United States Democratic Party Presidential candidate John Kerry, who had earlier denounced as "traitors" CEOs of US companies outsourcing to countries like India and China, acknowledged that the practice is here to stay but promised a level-playing field for the American worker. Politicians still currently debate whether outsourcing is a positive or negative phenomenon for the United States economy, as it can cause job loss, but also decrease the costs of products to American consumers. Harvard economist Mankiw recently advised the Bush administration regarding outsourcing. ==Research== ===Milken Institute === ''From: The Milken Institute Review - December 2004'' We looked into what happens to a dollar of U.S. corporate spending when a company moves a service job to India. We found that, far from being a zero-sum game, offshoring is a story of mutual gain, benefiting both countries. The receiving economy (India) captures 33 cents, in the form of wages paid to local workers, profits earned by local outsourcing providers and their suppliers, and taxes collected from second- and third-tier suppliers to the outsourcing companies. But the gains to the U.S. economy are much larger. The most obvious source of value is the cost savings enjoyed by U.S. companies. Thus, far from being bad for the United States, offshoring creates net value for the economy – to the tune of $1.12 to $1.14 for every dollar that goes abroad. ==See also== * Freelancing on the Internet *Offshoring * Supply chain * Vertical integration * Open Outsourcing ===Lists=== * List of management topics ==External links== * [http://www.legadoassociates.com/softwareoutsource.htm Software stays put] - by Wynn Quon, National Post. Why software outsourcing is not a long-term threat to the North American software industry. * [http://www.wired.com/wired/archive/12.02/india.html The New Face of the Silicon Age] - by Daniel H. Pink ''Wired Magazine'' * [http://www.theage.com.au/news/Soapbox/Indian-outsourcing-an-alternative-view/2004/12/21/1103391741596.html Indian outsourcing: an alternative view] by Sam Varghese. Dispels common myths about Indian outsourcing International trade Supply chain management Production and manufacturing
This didn't help, the word 'outsourcing' is kind of sidestepped here. I would also like to know more about the connection to economics... :Outsourcing is more of a management term than an economics one. If you want to look at the firm's production domestication decision from an economic point of view you might be best to look into transaction cost analysis. User:Mydogategodshat 05:58, 18 Feb 2004 (UTC) ---- == Help on Term paper == Hello, I'm a college student of Puerto Rico. I have an Economics class this semester and the professor has asked us to turn in a term paper. Mine's about "Outsourcing telecommunications industry and the labor market". Now, I'm not majoring in Economics or Business, so I'm kind of confused with the topic I'm supposed to cover. I read the definition of "Outsourcing" and it has helped a bit, but I still don't know what it means exactly. If there's anyone out there who KNOWS about this stuff, I'd appreciate it greatly. *I'm not asking anyone to do the job for me, just update me with my topic and some extra-extra help* Thank you. --User:208.20.13.223 :Well, we normally don't help out with homework here, but I can help out a little. The term "Outsourcing" is used in different manners. Sometimes it means getting a job done by an outside company (such as janitorial services) rather than having the job done internally (by employees). :The other use of the term refers to getting work done in cheaper labor markets. For example, an employer might lay off all his domestic employees (such as in the US) and hire employees who'll work for less, say in India or China. This is a hot topic right now as US employers are laying off employees in droves and hiring less expensive employees overseas. For some jobs, employers can hire 8 off-shore employees for what it pays one domestic employee (e.g. 8 * $10,000/year = 1 * $80,000/year). :So, what I think your prof wants is a report talking about how outsourcing is affecting employees in the telcomm market. I think they're getting laid off and they don't like it! :-) Your report may need to focus on both uses of the term or only one. HTH User:Frecklefoot— User:Frecklefoot | User talk:Frecklefoot 14:55, Sep 10, 2004 (UTC) ---- ==POV text== A portion of POV text was added by an anon user to the bottom of The international context. It appears below. Not all of it is POV, but enough of it is to warrant it (at least temporary removal). If you want to give a shot at NPOV'ing it, here it is: :Also, companies are able to foray into newer avenues, and accept more business with lesser margins, which were earlier restricted by the high cost of labor for them. :Also, when a country puts in restrictions on outsourcing by introduction of draconian laws, the country will have to face the long term consequences. This is because, such a protectionist attitude, will make them less cost-effective against other countries in the world which are open to such outsourcing. A clear example for this trend would ironically be India itself, whose protectionist attitude against foreign companies till the early 1990's resulted in it growing at a lesser rate vis-a-vis the other Asian countries. But with the liberalisation in 1990s India has gained rapid benefits, and is now threatening the so called super-powers by gaining rapid inroads into their markets as well. Good luck. The first paragraph above was tacked onto the end of the last paragraph in the section. User:Frecklefoot— User:Frecklefoot | User talk:Frecklefoot 17:08, Sep 27, 2004 (UTC) ---- ==Needs some rewriting== The "international context" is a mixed bag of positive and negative comments. While all of them seem to be true and related on topic, some of them sound like they are really geared towards one of the "sides" of the story. Also, it looks like people added one paragraph after another and there's no connection on the text. I won't touch that - I'm not that versed in the subject - but I really think someone more able should do a bit more rewriting on that, hopefully achieving a higher NPOV state. --User:Zeh 19:00, 3 May 2005 (UTC) ---- ==Questionable addition== An anon user added the following text to the "See also" section: :* 75% of outsourcing company project fail and 100% have yet to complete a project meeting all objectives - Reuters It would have been a valuable addition if the user had actually cited to source, instead he just pasted in the headline. Of course, however, the link actually belongs in the "External links" section. As it is, it was worthless. If anyone can find the actual article this user attempted to cite, please add it in. User:Frecklefoot— User:Frecklefoot | User talk:Frecklefoot 15:35, Dec 6, 2004 (UTC) ---- ==Encarta== Need proof we rock, Encarta sucks? They only ''just'' added an article on Outsourcing, mid-April 2005. -- user:zanimum ---- ==Data with no source== "According to a recent Zogby International poll, 71% of Americans feel that outsourcing is bad for the nation's economy. But " - removed this because no link was provided. also please note the apparent contradiction in the statement "international poll, 71% of americans"! Please explain more clearly... --User:70.112.18.109 :Okay, if you promise to sign your posts. I added your signature above. You can sign your posts with 3 or 4 tildes (~~~ or ~~~~ ). Peace. :-) User:Frecklefoot— User:Frecklefoot | User talk:Frecklefoot 14:33, May 6, 2005 (UTC)
See other meanings of words starting from letter:
Words begining with Outsourcing:
Outsourcing
Outsourcing
OutsourcingRaul
OutsourcingRaul
Outsourcing
Outsourcing (or contracting out) is often defined as the delegation of non-core Business Operations or jobs from Internal production to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that can be made for quality or financial reasons. A subset of the term (offshoring) also implies transfering jobs to another country, either by hiring local subcontractors or building a facility in an area where labor is cheap. It became a popular buzzword in business and management in the 1990s. ==Overview== Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider. 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. Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Outsourcing business is characterized by expertise not inherent to the core of the client organization. A related term is out-tasking: 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. ==The international context== With the rise of globalization, many companies are turning to either offshoring, offshore outsourcing or Global Sourcing. Offshore outsourcing more and more takes the shape of BPO, 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 cities like Bangalore and Chennai 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. This practice became even more popular after the Dot-com#Thinning_the_herd of the early 21st century. As many businesses struggled with cash-flow problems, many investors were leery of investing money in high-tech companies, which many felt were still vulnerable to the dot-com effect. Struggling to do more with less, companies looked for less expensive avenues of development and support. For the United States, India seemed like a perfect resource for these needs since many nationals spoke English language—a side-effect of several decades of England colonial rule. A company can hire an engineer in India, for example, for United States dollar10,000 a year whereas an equally qualified engineer in the U.S. could cost $60,000-$90,000 a year. A side effect of this practice led to the domestic unemployability of thousands of high-tech professionals, many of whom were new college graduates. Many of these new graduates studied high-tech fields specifically because a few years earlier, they were told there was an earnest need for people with the skills they actively acquired. Many companies required their employees to train their off-shore replacements, after which they were downsized (laid off). In practice, this trend has experienced mixed results. Some companies, which were required to hire off-shore talent by investors, reported communication barriers and high foreign personnel turnover rates. They would often ask for one thing, but be delivered a different item. Communication between onsite and offshore teams is a must. Attrition in the offshore company is another issue. One company in Pleasanton, California in the U.S. specializes in fixing jobs that were botched due to offshoring. Some companies report favorable results . One company said that the low cost of his Indian development team allows him to hire higher-paid American lead developers. Major companies doing outsourcing include Microsoft, Cisco Systems and IBM to name a few. Outsourcing, especially BPO (Business Process Outsourcing), has long been a factor in American business, but the trend is beginning to reach Europe. More outsourcing deals were signed there last quarter than in any single quarter since 2000. Most economists feel that it will inevitably remain a part of global trade. Outsourcing is not just related to the services sector. A lot of manufacturing of products is also outsourced to countries like China and Taiwan. Consumer products including clothes and computer hardware are manufactured in these countries due to cheap labor. These products in turn lead to a cheaper prices in the consuming nations. ==Politics== Outsourcing is an effect of globalisation. In the beginning of globalisation, many western businesses introduced their products in the eastern countries and reaped a lot of profit. The resource re-allocation which happens by outsourcing is a further consequence of globalisation. Countries that offer high-quality, yet cheaper labour include China, India, Russia and other eastern Europe and Asian countries. A much higher turn out of qualified engineers than their western counterparts in the recent past has aided these countries in providing a high-quality labour force. The Governor of the state of California in the U.S., Arnold Schwarzenegger, vetoed a bill that would have barred state contractors or agencies from outsourcing jobs offshore. United States Democratic Party Presidential candidate John Kerry, who had earlier denounced as "traitors" CEOs of US companies outsourcing to countries like India and China, acknowledged that the practice is here to stay but promised a level-playing field for the American worker. Politicians still currently debate whether outsourcing is a positive or negative phenomenon for the United States economy, as it can cause job loss, but also decrease the costs of products to American consumers. Harvard economist Mankiw recently advised the Bush administration regarding outsourcing. ==Research== ===Milken Institute === ''From: The Milken Institute Review - December 2004'' We looked into what happens to a dollar of U.S. corporate spending when a company moves a service job to India. We found that, far from being a zero-sum game, offshoring is a story of mutual gain, benefiting both countries. The receiving economy (India) captures 33 cents, in the form of wages paid to local workers, profits earned by local outsourcing providers and their suppliers, and taxes collected from second- and third-tier suppliers to the outsourcing companies. But the gains to the U.S. economy are much larger. The most obvious source of value is the cost savings enjoyed by U.S. companies. Thus, far from being bad for the United States, offshoring creates net value for the economy – to the tune of $1.12 to $1.14 for every dollar that goes abroad. ==See also== * Freelancing on the Internet *Offshoring * Supply chain * Vertical integration * Open Outsourcing ===Lists=== * List of management topics ==External links== * [http://www.legadoassociates.com/softwareoutsource.htm Software stays put] - by Wynn Quon, National Post. Why software outsourcing is not a long-term threat to the North American software industry. * [http://www.wired.com/wired/archive/12.02/india.html The New Face of the Silicon Age] - by Daniel H. Pink ''Wired Magazine'' * [http://www.theage.com.au/news/Soapbox/Indian-outsourcing-an-alternative-view/2004/12/21/1103391741596.html Indian outsourcing: an alternative view] by Sam Varghese. Dispels common myths about Indian outsourcing International trade Supply chain management Production and manufacturing
Outsourcing
This didn't help, the word 'outsourcing' is kind of sidestepped here. I would also like to know more about the connection to economics... :Outsourcing is more of a management term than an economics one. If you want to look at the firm's production domestication decision from an economic point of view you might be best to look into transaction cost analysis. User:Mydogategodshat 05:58, 18 Feb 2004 (UTC) ---- == Help on Term paper == Hello, I'm a college student of Puerto Rico. I have an Economics class this semester and the professor has asked us to turn in a term paper. Mine's about "Outsourcing telecommunications industry and the labor market". Now, I'm not majoring in Economics or Business, so I'm kind of confused with the topic I'm supposed to cover. I read the definition of "Outsourcing" and it has helped a bit, but I still don't know what it means exactly. If there's anyone out there who KNOWS about this stuff, I'd appreciate it greatly. *I'm not asking anyone to do the job for me, just update me with my topic and some extra-extra help* Thank you. --User:208.20.13.223 :Well, we normally don't help out with homework here, but I can help out a little. The term "Outsourcing" is used in different manners. Sometimes it means getting a job done by an outside company (such as janitorial services) rather than having the job done internally (by employees). :The other use of the term refers to getting work done in cheaper labor markets. For example, an employer might lay off all his domestic employees (such as in the US) and hire employees who'll work for less, say in India or China. This is a hot topic right now as US employers are laying off employees in droves and hiring less expensive employees overseas. For some jobs, employers can hire 8 off-shore employees for what it pays one domestic employee (e.g. 8 * $10,000/year = 1 * $80,000/year). :So, what I think your prof wants is a report talking about how outsourcing is affecting employees in the telcomm market. I think they're getting laid off and they don't like it! :-) Your report may need to focus on both uses of the term or only one. HTH User:Frecklefoot— User:Frecklefoot | User talk:Frecklefoot 14:55, Sep 10, 2004 (UTC) ---- ==POV text== A portion of POV text was added by an anon user to the bottom of The international context. It appears below. Not all of it is POV, but enough of it is to warrant it (at least temporary removal). If you want to give a shot at NPOV'ing it, here it is: :Also, companies are able to foray into newer avenues, and accept more business with lesser margins, which were earlier restricted by the high cost of labor for them. :Also, when a country puts in restrictions on outsourcing by introduction of draconian laws, the country will have to face the long term consequences. This is because, such a protectionist attitude, will make them less cost-effective against other countries in the world which are open to such outsourcing. A clear example for this trend would ironically be India itself, whose protectionist attitude against foreign companies till the early 1990's resulted in it growing at a lesser rate vis-a-vis the other Asian countries. But with the liberalisation in 1990s India has gained rapid benefits, and is now threatening the so called super-powers by gaining rapid inroads into their markets as well. Good luck. The first paragraph above was tacked onto the end of the last paragraph in the section. User:Frecklefoot— User:Frecklefoot | User talk:Frecklefoot 17:08, Sep 27, 2004 (UTC) ---- ==Needs some rewriting== The "international context" is a mixed bag of positive and negative comments. While all of them seem to be true and related on topic, some of them sound like they are really geared towards one of the "sides" of the story. Also, it looks like people added one paragraph after another and there's no connection on the text. I won't touch that - I'm not that versed in the subject - but I really think someone more able should do a bit more rewriting on that, hopefully achieving a higher NPOV state. --User:Zeh 19:00, 3 May 2005 (UTC) ---- ==Questionable addition== An anon user added the following text to the "See also" section: :* 75% of outsourcing company project fail and 100% have yet to complete a project meeting all objectives - Reuters It would have been a valuable addition if the user had actually cited to source, instead he just pasted in the headline. Of course, however, the link actually belongs in the "External links" section. As it is, it was worthless. If anyone can find the actual article this user attempted to cite, please add it in. User:Frecklefoot— User:Frecklefoot | User talk:Frecklefoot 15:35, Dec 6, 2004 (UTC) ---- ==Encarta== Need proof we rock, Encarta sucks? They only ''just'' added an article on Outsourcing, mid-April 2005. -- user:zanimum ---- ==Data with no source== "According to a recent Zogby International poll, 71% of Americans feel that outsourcing is bad for the nation's economy. But " - removed this because no link was provided. also please note the apparent contradiction in the statement "international poll, 71% of americans"! Please explain more clearly... --User:70.112.18.109 :Okay, if you promise to sign your posts. I added your signature above. You can sign your posts with 3 or 4 tildes (
See other meanings of words starting from letter:
O
OA | OB | OC | OD | OE | OF | OG | OH | OI | OJ | OK | OL | OM | ON | OP | OR | OS | OT | OU | OW | OX | OY | OZ |Words begining with Outsourcing:
Outsourcing
Outsourcing
OutsourcingRaul
OutsourcingRaul
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