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Outsourcing
(redirected from Labor arbitrage)

   Also found in: Encyclopedia, Wikipedia, Hutchinson 0.07 sec.
Outsourcing
A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.

Notes:
Outsourcing is an effective cost-saving strategy when used properly. It is sometimes more affordable to purchase a good from companies with comparative advantages than it is to produce the good internally. An example of a manufacturing company outsourcing would be Dell buying some of its computer components from another manufacturer in order to save on production costs. Alternatively, businesses may decided to outsource book-keeping duties to independent accounting firms, as it may be cheaper than retaining an in-house accountant.


Outsourcing
Purchasing a significant percentage of intermediate components from outside suppliers.

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More often than not, the business case for business-process outsourcing is built almost exclusively on expense reduction through labor arbitrage.
We're really all about a labor arbitrage play," said Cadforce President and Chief Executive Robert Vanech.
Suppliers that fail to fully exploit the labor arbitrage of low-cost labor markets, as well as new technologies, will become the dinosaurs in this new era of high-value outsourcing," Bendor-Samuel added.
 
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