Outsourcing
From Wikinfo
Outsourcing is a business practice or management technique where an organization contracts with another organization to provide some function that the organization has previously provided or might provide for itself, for example a manufacturer may contract with a data processor for inventory management rather than doing it themselves [1]. Outsourcing of information technology or IT needs is the archtypical example but the practice can be applied to almost any activity, for example janitorial services and security services are frequently oursourced [2].
The concept started with Ross Perot when he founded Electronic Data Systems in the 1950s. EDS would tell a prospective client, "You are familiar with designing, manufacturing and selling [furniture], but we're familiar with managing information technology. We can sell you the information technology you need and you pay us monthly for the service with a minimum commitment of two to ten years." Outsourcing as generally defined by those organizations that deliver such services, requires turning over management responsibility for running a segment of business. In theory, this business segment is not mission-critical, but practice dictates otherwise. Outsourcing business is sometimes characterized by expertise not inherent to the core of the client organization, sometimes by lower labor or other costs.
Outsourcing may occur domestically, as in the example of a manufacturer in Chicago oursourcing IT needs to a data processor in Cleveland, or internationally as when a book seller in Seattle oursources its telephone answering function to a service in India. International outsourcing in advanced technological areas is controversial expecially with the domestic workers displaced by the practice.
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References
- Adapted from the Wikipedia article, "Outsourcing" http://www.wikipedia.org/wiki/Outsourcing October 19, 2003
