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 ?
NewPower also announced today that in connection with the transition of these power customers, NewPower and IBM have reached an agreement to terminate their customer service outsourcing agreement, subject to the continued provision of services during a transition period.
Synergon Solutions, a premier 24/7/365 technical support and customer service outsourcing company, today introduced their new Technical Support Start-Up Package.
ZC Sterling Corporation is a leader in the financial services field, providing a Total Escrow Solution including hazard insurance tracking, property tax management and customer service outsourcing services to mortgage lenders and servicers nationwide.
TC Kokua, LLC is a customer service outsourcing company which provides inbound and outbound contact services to companies nationwide.
Escalating its participation in the expanding global customer service outsourcing market, Software Spectrum (Nasdaq:SSPE) announced today that its support services division has changed its name to Spectrum Contact Services and has expanded its services to include new markets.
The company handles more than 8,800 active customer accounts, including over 300 of the Fortune 500 companies, providing enterprise software management, customer service outsourcing and technical support solutions.
A global provider of customer service outsourcing solutions and product testing for e-business companies and software developers, Absolute Quality is using CustomHRMS to integrate its disparate HR, payroll and benefit systems, according to Cindy Sachse, director of human resources.

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