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 ?
BPO Management Services Inc., (BULLETIN BOARD: BPOM), Anaheim, Calif., a full-service business process outsourcing company focused on serving middle-market enterprises, has announced that Spiegel Brands, Inc., Chicago, the women's clothing catalog marketer, and Shasun USA, Inc., one of the world's largest producers of ibuprofen, have signed multi-year contracts for its information technology outsourcing solutions.
Vodafone yesterday announced that it had agreed an information technology outsourcing deal for its Indian unit with IBM, while a separate infrastructure sharing deal will enable it to save costs and capital.
WESTBORO - Virtusa Corp., an information technology outsourcing company, will report third quarter 2008 financial results after the markets close Jan.
It's common wisdom that, as the authors argue, "the center of gravity in the technology world has shifted east." Certainly, India's leap into technology and its dominant position in technology outsourcing for Western companies has been chronicled for years; China's technology prowess is in more of a developmental stage, but the potential is enormous.
Our BPO services are supported by information technology outsourcing services that includeapplication hosting, telecommunications infrastructure, operations monitoring, and help desk.
With over 18 years at the executive level in the contact center industry, Gross joins TCIM Services from ACS, a $5 billion publicly held provider of outsourced business process and technology outsourcing, where he had profit and loss responsibility for $250 million in revenue including operations and relationships in four countries on three continents.
Prior to joining WWRE he served as the global director of retail and consumer industries and vice president of EDS, an information technology outsourcing and services firm.
Instead, it's playing catch-up as the bulk of the world's information technology outsourcing goes to rivals in India and other developing nations.
On the other hand, Craig says affiliated Computer Services (NYSE: ACS), the Dallas-based business and information technology outsourcing services firm, "still has an attractive upside." He admits that some investors might find e-business, network management, and information security boring, but he maintains that the stock demands your full, undivided attention.
The firm provides business process and information technology outsourcing services.
In January 2002, PSI acquired the Aditya Birla Group's main technology outsourcing business Birla Technologies Limited.
With nearly 85% of the global offshore technology outsourcing business, India is often called the "birthplace of offshore outsourcing." Over the past several years, the country has become a powerhouse in meeting the demands of insurers' outsourced information technology and back-office processes.

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