subject: O Is For Outsourcing [print this page] It is said that outsourcing has existed even thousands of years ago, but as a business strategy, outsourcing came into existence in 1989. At that time, some companies were not able to perform core functions by themselves. In order to keep their businesses going, some companies had to purchase services of outside contractors. These included publishers who needed to outsource several of their core functions to outside parties. For example, they needed to contract a separate entity for the printing, and another company for the distribution of the finished product itself.
By the 1990s, organizations started to become more and more self-sufficient to be able to perform their core functions well. Outsourcing, however, still continued to exist and even evolved to catch up with the times. As part of cost cutting measures, companies delegated some of their business functions to outside parties. These functions, this time, are not core functions but are still important to the operations of the company. This is the outsourcing concept that most of us know and understand today.
At present, this is common for a company, especially those big and diverse ones that are engaged in several types of businesses at once. For those that do not understand businesses very well, they could think that outsourcing goes against a company's aims and goals to establish itself in the market. This is because outsourcing involves a third party, a firm outside the group or company, which specializes in certain services that the company may need. It is a common misconception that a company exists only for itself, and that anything outside it, is considered competition and alien.
This transfer is governed by an agreement or contract between the third-party and the company itself. The common outsourced functions include customer support, web development and design, as well as writing jobs such as ghostwriting and content writing. Companies also sometimes utilize third parties to provide research into a potential market, either as part of a feasibility study for a new business or to improve existing services and offerings. All of these are done by a firm, which is not connected, to the company or the organization it belongs to.
Offshoring, on the other hand, is done when a company utilizes the services of a foreign firm for a specific function. To conclude, outsourcing may include some degree of offshoring like the rising popularity of call centers in Asia. Offshoring, however, may not necessarily be outsourcing because some companies may own facilities overseas, which could be considered in-sourcing and not outsourcing.
Despite their differences, the line between outsourcing and offshoring has significantly blurred in the past few years, because of the rampant practice of contracting outsourced services in foreign countries, especially in India.
