Outsourcing entered the business lexicon in the 1980s and often refers to the delegation of non-core operations from internal production to an external entity specialising in the management of that operation. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of worldwide labour, capital, technology and resources. Though often used interchangeably, outsourcing differs from offshoring in that outsourcing is relative to the restructuring of the firm while offshoring is relative to the nation (see below), though the two are not mutually exclusive, especially under conditions of globalization. Fundamentally and historically, outsourcing is a term relative to the organisation of labour within and between societies.
Contents

Overview

“Outsourcing” involves transferring or sharing management control and/or decision-making of a business function to an outside supplier, which involves a degree of two-way information exchange, coordination and trust between the outsourcer and its client. Such a relationship between economic entities is qualitatively different from traditional relationships between buyer and seller of services in that the involved economic entities in an “outsourcing” relationship dynamically integrate and share management control of the labour process rather than enter in contracting relationships where both entities remain separate in the coordination of the production of goods and services. Business segments typically outsourced include information technology, human resources, facilities and real estate management, and accounting. Many companies also outsource customer support and call center functions, manufacturing and engineering. Consequently, a debate has ensued concerning the benefits and costs of the practice as well as how to categorize it as a phenomenon.

Always evaluate the communication ablities of your outsourcing vendor along with technical and operational competencies.

So you’ve decided to outsource certain functions to India as part of a corporate revenue and growth strategy and are scouting around for a partner. Bear in mind that while judging the technical and operational competencies of potential vendors, you need to simultaneously test their communication abilities too. An outsourcing deal is a long-term relationship and anything short of open and honest communication can wreck the partnership.

As a client, you expect:

(a) Correctness - in terms of the how the work is to be done,

(b) Completeness - of all work done, and

(c) Commitment to deadlines.