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What Is All This "Outsourcing" Business Anyway?
By Cindy Ioriatti, Admin and Beyond, LLC
Posted: April 6, 2011
If there is one thing we know how to do, as a business community, it's come up with buzz words.
Over the last few years outsourcing has become big business. The following, although loosely defined, are some of the more common terms associated with outsourcing.
Virtual Assistance (VA): An individual, or group of individuals who, generally, provide some variety of back-office or front-office support for small to mid-sized businesses and entrepreneurs from a virtual location, such as the Internet.
Business Process Outsourcing (BPO): Involves the contracting of the operations and responsibilities of specific business functions (or processes) to a third-party service provider outside the company, replacing in-house labor.
Offshoring: Relocation of entire processes, or segments of processes, functions, or a discrete piece of work, outside the boundaries of the US. Work may be performed by a sister company within the global corporation or contracted out to another firm.
Knowledge Process Outsourcing (KPO): Outsourcing for specialized skills, generally scientists, doctors and lawyers
Legal Process Outsourcing (LPO): Law firms outsourcing some of their legal needs. Mostly secretarial or research.
Back Office Outsourcing: Includes internal business functions such as human resources or finance and accounting
Front Office Outsourcing: Includes customer-related services such as contact center services.
Homesourcing (also known as homeshoring): "The transfer of service industry employment from offices to home-based employees with appropriate telephone and Internet facilities." Homesourcing is best thought of as a combination of outsourcing and telecommuting. Can be independent contractors but generally it is hired employees working from home.
Offshoring: Relocating of a whole or piece of a process, function, or a discrete piece of work outside the boundaries of the US. Work is performed either by a sister company within the global corporation or it is contracted out to another firm.
Onshoring: Any direct investment into the domestic marketplace by a domestic company.
Nearshorting: Is a domestic company investing outside the country, but into a neighboring or “near” country. Example – Mexico or Canada, part of the Americas as a whole when considering the entire world.
Inshoring: Refers to an investment by a foreign company into the US. Also called an inbound foreign direct investment.
Global Sourcing: Finding the most cost efficient location for manufacturing a product, regardless where that location might be.
Ruralsourcing: Small towns need jobs and they offer a cheaper cost of living than urban centers. Rates can be as much as 25% to 50% lower than comparable skills in urban areas.
Domestic Sourcing: Keeping your outsourcing needs within your country. Used by Rural Sourcing Inc, but not (T)
Internal Sourcing: Purchasing products and services within your company.
External Sourcing: Purchasing products or services outside your company, from a third party.
Confusing as it may seem, these are all just terms for new and different ways of getting the job done. The method you choose is up to you, but now you know the facts to help you make a more educated decision.
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