outsourcing

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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 ?
Hence, removing the subsidies fully (for argument's sake), the government can get back an estimated amount of SSP 3.
SSP America/Canada operates in more than 40 airports across North America bringing a variety of local, regional and national brands to the traveling consumer at a vast array of price ranges.
He commented: “I'm delighted to join SSP and am looking forward to putting my experience of programme delivery and working within global organisations to good use.
While relatively unknown outside of the SSBN arena, from a Supply Corps perspective SSP interacts with a number of familiar organizations - including Naval Supply Systems Command (NAVSUP) Headquarters, NAVSUP Weapon Systems Support, NAVSUP Fleet Logistics Center Puget Sound, Defense Logistics Agency, Naval Sea Systems Command, Fleets, submarine type commands, and Trident Refit Facility Kings Bay.
We describe next, the successful step-growth SSP of chain-growth ROP synthesized pre-PLLA.
SSP Germany operates in over 50 stations, 30 motorway service areas and is now present in 6 airports.
A number of key SSP figures - including MSPs Rosie Kane and Carolyn Leckie - gave evidence against Sheridan.
By aiming a light beam into any substantial body of liquid ethane or methane, the SSP will attempt to record the index of refraction of the fluid, another indication of its density.
If you have to go into hospital, your SSP won't be affected.
His investment in SSP reaffirms his trust in the machinery market.
As an SSP company, Thalhimer, based in Richmond, Va.
Incorporating both the advantages of a leader pin for guided ejector bushings and the strength of a support pillar, new SSP guided-ejection support pillars are available from Diemould Service Co.