Outsourcing definitions

By Mohamed El Zahaby 

http://blog.elzahaby.com/2006/08/04/outsourcing-definitions.aspx

Outsourcing definitions

“outsourcing,” “offshore outsourcing,” and “offshoring” are used interchangeably in public discourse despite important technical differences. To be consistent, “outsourcing,”
in corporate context, represents an organizational practice that
involves the transfer of an organizational function to a third
party.When this third party is located in another country the term “offshore outsourcing” makes more sense. “Offshoring,”
in contrast, represents the transfer of an organizational function to
another country, regardless of whether the work stays in the
corporation or not. In short, “outsourcing” means sharing
organizational control with another organization, or a process of
establishing network relations within an organizational field. "Offshoring,”
on the other hand, represents a relocation of an organizational
function to a foreign country, not necessarily a transformation of
internal organizational control

Outsourcing (or contracting out) is
often defined as the delegation of non-core operations or jobs from
internal production within a business to an external entity (such as a
subcontractor) that specializes in that operation. Outsourcing is a
business decision that is often made to lower costs or focus on
competencies. A related term, offshoring, means transferring work to
another country, typically overseas. Offshoring is similar to
outsourcing when companies hire overseas subcontractors, but differs
when companies transfer work to the same company in another country.
"Outsourcing" became a popular buzzword in business and management in
the mid-1990s.

Offshoring can
be defined as relocation of business processes from one country to
another. This includes any business process such as production,
manufacturing, or services.

Offshoring can be seen in the context of either production offshoring or services offshoring. After its accession to the WTO, China
emerged as a prominent destination for production offshoring. After
technical progress in telecommunications improved the possibilities of
trade in services, India became a country leading in this domain though many parts of the world are now emerging as offshore destinations.

The
economic logic is to reduce costs. If some people can use some of their
skills more cheaply than others, then those people have the comparative
advantage. The idea is that countries should freely trade the items
that cost the least for them to produce.

Offshore outsourcing is
the practice of hiring an external organization to perform some or all
business functions in a country other than the one where the product or
service will be sold or consumed. It can be contrasted with offshoring,
in which the functions are performed in a foreign country, whether by
the foreign subsidiary of the same company or a third-party. Opponents
point out that this sends work to other countries than the one the
opponents live in, thereby reducing domestic employment and domestic
investment in the countries which, because of higher wages, are subject
to outsourcing by countries with lower wages. Many jobs in the infotech
sectors - such as data entry, computer programming, and customer
support in countries such as the United States and the United Kingdom - have been or are potentially affected.

Nearshoring or "nearshore outsourcing,"
is a concept for the form of outsourcing in which business processes
are relocated to locations which are, generally, cheaper and yet
geographically nearer. The term was created and copyrighted by Softtek,
a Mexican IT company which provides nearshore outsourcing to the US and the European Union.

Homeshoring
is "the transfer of service industry employment from offices to
home-based employees with appropriate telephone and Internet
facilities"  Homeshoring is best thought of as a combination of outsourcing and telecommuting.

Traditionally,
employers were most likely to homeshore call-centers and other customer
service processes. However, this trend is changing as employers realize
a wider variety of work is amenable to homeshoring. The ITPAA reports
"it's no longer just call centers and information-technology jobs. Now
it's architects, accountants, tax preparers and financial analysts."

Open outsourcing is a socioeconomic
movement resulting from the marriage of the open source movement and
the recent trend towards the international outsourcing of programming.

Open
outsourcing makes open source technology more accessible to businesses
and individuals by employing an inexpensive international labor force
of programmers, often on a contractual piecework basis. Small
businesses may not be technical enough to efficiently utilize open
source resources in-house or large enough to hire a full time
technician. Larger businesses with IT staff may lack technicians with
specific skills or knowledge. Open outsourcing also reduces some of the
risks associated with outsourcing by making the resulting code publicly
available through open source licensing.

The
combination of outsourcing techniques with open source business models
has the potential to improve the software user's experience with both.
That is, open source solves some of the problems commonly associated
with outsourcing and outsourcing solves some of the commonly
encountered challenges with employing open source.

Freelancer
(freelance worker) is a self-employed person working in a profession or
trade in which full-time employment is also common. The term was first
coined by Sir Walter Scott (1771-1832) in his well-known historical
romance Ivanhoe to describe a "medieval mercenary warrior." The phrase
later transitioned to a figurative noun around the 1860s then
officially recognized as a verb in 1903 by various authorities in
etymology (e.g., laceName w:st="on">OxfordlaceName> laceType w:st="on">UniversitylaceType>).
Only in modern times has the term morphed from a noun (a freelance or a
freelancer) into various verb forms (a journalist who freelances), and
an adverb (she worked freelance)

The
author and poet Ernest William Hornung (1866 - 1921) also used the term
in "The Gift of the Emperor" to describe something of poor quality: "I
warmed to my woes. It was no easy matter to keep your end up as a raw
freelance of letters; for my part, I was afraid I wrote neither well
enough nor ill enough for success."

Fields
where freelancing is especially common include journalism and other
forms of writing, computer programming and graphic design, consulting,
and many other professional and creative services. But the practice is
widespread: for example, bounty hunters and mercenaries are freelances,
with their full-time counterparts being, respectively, the police and
the military. 

The
Internet has opened up many freelance opportunities, expanding markets
and helping to build it into one of the largest economic segments for
many economies. Development for freelancing has been especially high
for software development, information technology, and business
documentation.

Freelance
practice varies greatly. Some require clients to sign written
contracts, while others may perform work based on verbal agreements,
perhaps enforceable through the very nature of the work. Some
freelancers may provide written estimates of work and request deposits
from clients.

Payment
for freelance work also varies greatly. Freelances may charge by the
day or hour, or on a per-job basis. By custom, payment arrangements may
be upfront, half-half, or upon completion