outsourcing

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Related to Smartsourcing: outsource

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 ?
Herrera, COO of Atterro and leader of the Atterro smartSourcing Solutions team added, "smartSourcing is an enlightened Atterro-specific approach which gives our clients customized service alternatives beyond conventional outsourcing or traditional staffing.
In addition to the SMARTsourcing Conference & Expo Series, YEAR 2000 National Symposium Series and XMLeadership Series.
SMARTsourcing Series co-sponsors and participants include leading analyst and research firms: Aberdeen Group, Cutter Consortium, Giga Information Group, Gartner Group, Hurwitz Group, The Yankee Group, Triaxsys Research and Doculabs.
Additional 1999 SMARTsourcing Conferences will be held in Chicago (September 22-24) and New York (October 25-27).
In addition to the SMARTsourcing Conference & Expo Series, YEAR 2000 National Symposium Series and XMLeadership Series BrainStorm Group offers a set of integrated services in the areas of proprietary conference development and the outsourcing of content development, sales, event marketing and management for the high technology marketplace.
As organizations reflect on their sourcing options, the SMARTsourcing Conference Series will assist organizations looking to achieve competitive advantage, increase market share and reallocate internal resources.
Additional 1999 SMARTsourcing and YEAR 2000 Conferences will be held in Chicago (September 22-24), and New York City (October tbd).
Our SMARTsourcing Conference is among the fastest growing conference series in the country and reflects the increased demand and tremendous changes underway in IT Outsourcing.
The SMARTsourcing Conference provides conference attendees the opportunity to hear from IT Outsourcing "thought leaders" including: Wendell Jones author of Outsourcing Information Technology Systems and Services, Ian Hayes of Clarity Consulting and conference co-chairman, Michael Corbett of Michael F.
The SMARTsourcing Series' mission is to provide insight and education for senior management, redefine antiquated images of `outsourcing' and present the business imperative for the strategic implementation of project sourcing as a way to leverage an organization's IT investment.
Rock, president of BrainStorm Group, "the SMARTsourcing Series will become the industry's leading business and IT management forum to comprehensively cover the state-of-the-practice of current SMARTsourcing options.