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Overview
A precise definition of outsourcing has yet to be agreed upon. Thus, the term is
used inconsistently. However, outsourcing is often viewed as involving the
contracting out of a business function to an external provider. In this sense, two
organizations may enter a contractual agreement involving an exchange of services
and payments. Of recent concern is the ability of businesses to outsource to
suppliers outside the nation, sometimes referred to as offshoring or offshore
outsourcing (which are odd terms because doing business with another country
does not mean you have to go offshoreIn addition, several related terms have
emerged to grasp various aspects of the complex relationship between economic
organizations or networks, such as nearshoring, multisourcing and strategic
outsourcing. Almost any conceivable business practice can be outsourced for any
number of stated reasons. The implications of outsourcing objectively and
subjectively vary across time and space.
DEFINITIONS
• Outsourcing often refers to the process of subcontracting to a third-party.
• Outsourcing is usually the term used when a company takes a part of its
business and gives that part to another company. In recent times, the terms
has been most commonly used for technology related initiatives such as
handing over the IT help-desk to a third-party.
http://www.mariosalexandrou.com/definition/outsourcing.asp
• Outsourcing -The procuring of services or products, such as the parts used
in manufacturing a motor vehicle, from an outside supplier or manufacturer
in order to cut costs. http://www.answers.com/topic/outsourcing
• Outsourcing is an arrangement in which one company provides services
for another company that could also be or usually have been provided in-
house.
http://searchcio.techtarget.com/sDefinition/0,,sid182_gci212731,00.html
• Outsourcing - Contracting, sub-contracting, or externalizing non-core
activities to free up cash, personnel, time, and facilities for activities where
the firm holds competitive advantage. Firms having strengths in other areas
may contract-out data processing, legal, manufacturing, marketing, payroll
accounting, or other aspects of their businesses to concentrate on what
they do best and thus reduce average unit cost. Outsourcing is often an
integral part of downsizing or reengineering. Also called contracting out.
http://www.businessdictionary.com/definition/outsourcing.html
• Outsourcing -Work done for a company by people other than the
company's full-time employees.
http://www.investorwords.com/3534/outsourcing.html
• Outsourcing -The practice of having certain job functions done outside a
company instead of having an in-house department or employee handle
them; functions can be outsourced to either a company or an individual.
http://www.entrepreneur.com/encyclopedia/term/82610.html
Venture Capital. Some countries match government funds venture capital with private
venture capital for startups that start businesses in their country.
http://www.ecommercetimes.com/story/17802.html
http://services.silicon.com/itoutsourcing/0,3800004871,39166820,00.htm
2. China:
is being touted as being the next big IT outsourcing destination and is expected to rival India by
2007. The Chinese IT services market has grown nearly 42% a year since 1997. This growth is
mainly built on the pricing plank and a study by PriceWaterHouse Coopers that suggests that
using China based outsourcers could save companies approximately 37% as compared to those
from India. The Chinese government has also put in its bit to enhance China’s image as an
outsourcing destination. It has liberalized the economy, laws and policies and laid a major
emphasis on education. China is fast becoming a low cost alternative to its economically
developed neighbors like, Korea, Japan, Taiwan, Hong Kong and Singapore.
3. Malaysia:
has well-developed world-class infrastructure and its outsourcing industry has good government
support. A number of policies are being put in place to widen the labor pool and improve
proficiency in English and technical skills.
4. Philippines:
has many years of experience in the BPO space and have to their credit a vast population that
speaks English with American accents, while also being exposed to Western culture and global
business. It also has high bandwidth as compared to its other neighbors.
5. Hungary:
is slowly emerging as Europe’s leading IT service providers. Once an Eastern Bloc country, it
has the advantage of offering its European counterparts with near shore facilities at a much lower
cost. It also has to its credit a large pool of tech savvy workers with cultural compatibility to
Western Europe. Among the top companies that have set up shop here are the likes of TCS, EDS
and IBM. In a deal worth $35.54 million, IBM was to create approximately 700 service centre
jobs, which include financial services, procurement, human resources and call centre positions.
7. Russia:
is emerging as a preferred destination for outsourcing of complex R&D problems for most global
corporations. The IT companies here are built on the “boutique” approach, which focuses on the
solving of advanced R&D problems. Russia has over 2 million people working in their over 4500
R&D centers, and of these at least 1 million are researchers and scientists. This pool of highly
educated and talented workers known for their unconventional approach and complex problem
solving capabilities has attracted companies to outsource their R&D work to Russia. The
companies with a presence here include Bechtel, IBM, Intel, Boeing, Microsoft, Sun
Microsystems and Motorola.
8. South Africa:
is one country that is slowly emerging as an outsourcing destination that is taking advantage of
increased competition worldwide. South Africa is advantageous to the UK market as it lies in the
same time zone and has a similar culture. It has to its advantage good infrastructure; call center
operation capabilities and mastery over the English language.
9. Mexico:
is increasingly becoming a preferred destination to service Spanish speaking populations. Big
companies like Accenture, IBM and EDS have a significant presence here.
10. Poland:
is another country favored by the German companies as it has a large base of German and
English speakers. Its advantages as an outsourcing destination lie in its cultural and time zone
compatibility for Western Europe.
11.Brazil:
The business of offshoring has been maturing for decades. Driven by strategies to reduce costs,
generate economies of scale, and focus on core competencies, it's clear that IT and business
process outsourcing work. India has stood out as the pre-eminent force in this process; but in
practice most global companies and offshore service providers are looking to spread their
facilities and investments on a global basis, rather than in just one location.
http://www.chillibreeze.com/articles/top-countries-outsourcing.asp
TOP 100 GLOBAL OUTSOURCING COMPANIES
http://www.outsourcingprofessional.org/content/23/152
/1197/
CONCLUSION
Irrespective of whether outsourcing is ‘adaptive’ or ‘transformational’ or one of the
many other forms it can take, it generally replaces an existing activity or set of
activities in an enterprise. It typically comes under the OE banner and within that
context can be an effective component of the operational strategy of an enterprise.
It can also contribute to or underpin enterprise strategy in conjunction with other
business activities, but viewed from this level it manifests currently as being more
tactical than strategic.Moving from a tactical status to being really strategic for the
enterprise presents a challenge and a great market opportunity for the outsourcing
supplier community.
Whether the big established providers, many of whom have to contend with
relatively high overheads and the burdens of legacy and size, can effectively exploit
this gap in their market, anytime soon, is doubtful. Some of them are trapped into a
‘me too’ downward spiral based on repeated restructuring and reorganization which
seeks to emulate a perceived ‘ best of breed’ competitor, inevitably resulting in
ever thinner profit margins, diluted focus and a dissipating brand equity.
A way forward to explore and meet this challenge may be represented by a small
number of expert and importantly, independent, specialist outsourcing
consultancies, which stand between the enterprise and the outsourcing providers.
These boutique organizations have the insight, experience and objectivity to
spearhead the process of relating strategic enterprise imperatives to the ability and
willingness of providers to meet them.
The preferred providers resulting from this process may very well be the smaller,
more flexible ‘crouching tiger’ outsourcing organizations which can seize the
opportunity and fill this market gap, enabling outsourcing to figure increasingly at
the core of enterprise strategy.
Becoming really strategic for the enterprise may not be that far off for outsourcing
after all.