outsourcing

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Related to Customer Service Outsourcing: Call Centers

Outsourcing

Purchasing a significant percentage of intermediate components from outside suppliers.

Outsourcing

The practice of a company hiring a different company to supplement its services at a lower cost. For example, a company may outsource its accounting to another firm, which would then prepare and provide appropriate statements for the company. Likewise, an automobile manufacturer may buy auto parts from another company and use them to make its own cars. Companies outsource in order to reduce their costs and thereby reduce the prices they charge for their goods and services. The practice is somewhat controversial, especially as some companies in the developed world outsource to firms in other, often developing nations. Critics contend that this drives jobs out of the home country, while proponents argue that this benefits consumers.

outsourcing

the buying-in of components, finished products and services from outside the firm rather than self supply from within a firm. In some cases this is done because it is more cost-effective to use outside suppliers or because outside suppliers are more technically competent or can supply a greater range of items. For example, in 2000 the Bank of Scotland signed a 10 year outsourcing agreement with IBM which involves IBM taking over the Bank of Scotland's computer systems and operating them. The deal will enable the Bank of Scotland to ‘save’ up to £150 million on its information technology (IT) costs as well as being able to draw on IBM's expertise to create a more technically advanced IT infrastructure than it could have achieved on its own. On the debit side, however, reliance on outside suppliers may make the firm vulnerable to disruptions in supplies, particularly missed delivery dates, problems with the quality of bought-in components, and ‘unreasonable’ terms and conditions imposed by powerful suppliers. See SOURCING, INTERNALIZATION, MAKE OR BUY, VERTICAL INTEGRATION, VIRTUAL CORPORATION.

outsourcing

the buying-in of components, finished products and services from outside the firm rather than self-supply from within the firm. In some cases this is done because it is more cost-effective to use outside suppliers or because outside suppliers are more technically competent or can supply a greater range of items. For example, in 2000 the Bank of Scotland signed a 10-year outsourcing agreement with IBM that involved IBM taking over the Bank of Scotland's computer systems and operating them. The deal enabled the Bank of Scotland to ‘save’ up to £150 million on its information technology (IT) costs as well as being able to draw on IBM's expertise to create a more technically advanced IT infrastructure than it could have achieved on its own.

On the debit side, however, reliance on outside suppliers may make the firm vulnerable to disruptions in supplies, particularly missed delivery dates, problems with the quality of bought-in components, and ‘unreasonable’ terms and conditions imposed by powerful suppliers. The decision to produce internally or outsource will depend upon the combined production costs and TRANSACTION COSTS of the alternative supply source. See TRANSACTION, INTERNALIZATION, MAKE OR BUY, VERTICAL INTEGRATION.

References in periodicals archive ?
Speaking on "The Future of Customer Service Outsourcing," Sukant Srivastava, Convergys Managing Director and Country Leader for India, explains how customer service outsourcing has matured to be not only a tactic to reduce costs, but also a strategic tool to transform performance, improve customer interactions, and drive growth.
The company also opened a new call center services facility in Portsmouth, New Hampshire, providing customer service outsourcing services.
Stream is a global technical support and customer service outsourcing provider.
Stream provides technical support and customer service outsourcing to reputable client base across the globe.
Stream is recognized as a leading provider of technical support and customer service outsourcing to high-technology companies.
GTC's low cost customer service outsourcing unit, based in India, will continue to do business as Perfexa Solutions and will remain focused on finding new clients who can benefit from the lowered costs of labor in the Indian outsourcing market.
a customer service outsourcing company that provides telephone call center services to Fortune 500 and Global 2000 companies violated state and federal labor laws, according to a lawsuit filed late Tuesday in federal court.
We share the visions and plans of President Gloria Macapagal-Arroyo and plan to assist the Philippines in becoming the global capital of customer service outsourcing," said Brian Silverman, president and CEO of Five9.

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