Outsourcing offshoring
By: Bred • Essay • 434 Words • January 23, 2010 • 992 Views
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Outsourcing is the transfer of the management, and also the day by day execution of an entire business function to an external service provider. It is a firm's practice of paying another firm to perform a function or produce a product that could be made by the paying firm. Furthermore it has to do with the entering of the client organization and the supplier into a contractual agreement. Under that specific agreement the supplier acquires the means of production like the transfer of people, assets and other resources from the client. The client agrees to acquire the services from the supplier for the term of the contract. In addition business segments that are typically outsourced include information technology, human resources, facilities and real estate management, accounting, Customer support and call center functions, like telemarketing, customer services, market research, manufacturing and engineering.
On the other hand off shoring is the shift of an organizational function to another country, either or not the work is outsourced or stays inside the same corporation. It also refers to business processes that are relocated to a lower-cost location, usually in a foreign country. Outsourcing and off shoring began in the 1960s and 70s by transferring physical manufacturing processes to lower-cost areas. For example, some U.S. companies shifted production to factories in Mexico. Off shoring of physical products then moved to other low-cost locations such as China, India, the Philippines, and Eastern Europe.
In addition offshore outsourcing is the practice of hiring an external organization to perform some business functions in a country except the one where the products or services are actually developed or manufactured. There are four basic types of offshore outsourcing,