Outsourcing 101

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By Chiena Bondoc

In the 1990s, the term outsourcing has become a widely held buzzword in the world of business and management. But this word can never be found in the dictionary. Outsourcing, in terms of what it has done in the business world, has benefited a lot but at the same time, many still despise it. Here is an open door in the world of outsourcing.

Outsourcing Defined
As once said by www.wikipedia.org, Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that is often made to lower costs or focus on competencies. Also, an article from www.blogsource.org says, Outsourcing is the act of obtaining services from an external firm.

Business Process Outsourcing (BPO)
In the business world, the word “outsourcing” frequently refers to a specific kind of outsourcing, business process outsourcing (BPO). When an organization turns over the running of a particular business process (like accounting or payroll) to a third party that specializes in that process is when BPO come about. With this, the BPO firm can finish the process more professionally, allowing the original firm free to give focus on its core competency.

Outsourcing: Its Origins
It was Ross Perot who first made popular the idea of outsourcing when they founded Electronic Data Systems (EDS) in year 1962. These days, EDS is a multi-billion dollar company, employing over 70, 000 people and is only one of numerous global BPO firms.

Offshore Outsourcing: What is it?
The terms “outsourcing” and “offshoring” are often used interchangeably in public conversation in spite of the importance of their specialized distinctions. For consistency, offshore outsourcing, more known as “offshoring”, refers to the process of relocating an organizational function overseas, but not necessarily an alteration of internal organizational control. For the past ten years, contracts of business process outsourcing have increasingly been given to firms in developing countries such as Philippines, India and many others.

Offshoring to Critics
In recent times, offshore outsourcing has become a very talk about issue. It has been said that this industry is such a threat to many U.S. jobs.

The Fight Back
However, many economists have recently inferred that offshore outsourcing did not cause the higher-than-expected unemployment numbers. Also, that offshore outsourcing has actually had a positive bearing on the economy of United States.


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