Webster Definition Of Outsourcing: Details
Many people have varied conceptions and webster definition of outsourcing, a word that can be used in many ways. Using the term “outsourcing” provokes confusion in some people. Thus, delineating the term is of chief importance to make discussions involving outsourcing clear. Now, it has to be mentioned that outsourcing should be viewed as a process—not necessarily a service. When a person says outsourcing, he describes a manner in which something is done.
Webster Definition Of Outsourcing: Everything You Need to Know
What exactly is outsourcing?
These are some of the definitions of the term as they appear on different dictionary websites.
- Webster-Dictionary.org defines outsourcing as the act of paying another company to provide services which a company might otherwise have employed its own staff to perform.
- Merriam-Webster.com defines the word “outsource” as to procure goods or services needed by a business or organization under contract with an outside supplier.
- Dictionary-Reference.com defines “outsource” as to obtain goods and services from an outside source.
Generally, outsourcing means procurement of services from another company. Basically, there are two entities involved in outsourcing. First, the company that serves as the buyer of services. Second, the company that provides the services needed. When the first company buys services offered by the provider, it is actually outsourcing.
Why do companies outsource?
Outsourcing is not a new thing. It has been going on for decades. When a company transfers some jobs from its company to another company, it is outsourcing. This may be appropriately called business process outsourcing. Manufacture and production can be farmed out to companies with technological capabilities and trained workforce.
There are various reasons why companies opt to farm out processes. Here are some common reasons.
- To gain access to technology
- To tap into appropriate manpower
- To save overhead
- To have access to low cost services
- To stay abreast with the competition
Perhaps the most compelling reason is operational cost reduction, which became a pressing motivation during the recent recession. Many companies have moved production to countries where cost of labor is much cheaper. Profitability is one major driving force that fueled the rise of the outsourcing trend.
Offshore Outsourcing
To gain greater profitability, companies opt for offshore service providers. A company based in United States may look for possible business process sites in China, for instance, where labor cost is way cheaper. Revenues earned through offshore outsourcing are immense. Companies report 40% increase in savings.
Offshore outsourcing is a specific process of outsourcing wherein a company farms out business process to a company from a different country. The advantages are clear. The success of companies that opted for this scheme in outsourcing has compelled others to join the bandwagon.
What about IT outsourcing?
Today, there is an increasing demand for processes like technical support to be subcontracted to capable BPO firms. The rise in demand caused a growing number of BPO firms to be established in various places in Asia, Australia, and South America. Not only are there call centers and customer support companies in these areas but there are also agencies that offer a wide range of assistance, from online marketing to website development.
Webster Definition Of Outsourcing: In Conclusion
The definition of outsourcing in dictionaries is too simplistic to encompass all the elements that are involved. Nonetheless, it is a word everyone should know by now—because it is affecting everyone’s lives now on Webster definition of outsourcing.
