What is Outsourcing?

• Outsourcing is the delegation of tasks or jobs from internal production to an external entity (such as a subcontractor). Most recently, it has come to mean the elimination of native staff to staff overseas, where salaries are markedly lower. This is despite the fact that the majority of outsourcing that occurs today still occurs within country boundaries, especially in North America. It became a popular buzzword in business and management in the 1990s.

• Where functions previously performed by an organization are supplied under contract from a third party.

• Buying goods or services instead of producing or providing them in-house.

• While outsourcing is not exactly a new innovation, the shifts that have occurred recently in this space are worth noting. As the need for e-learning moves higher up on the IT and corporate training agendas, organizations are wont to take on the IT management burden of implementing a learning management system (LMS).

• The transfer of components or large segments of an organization's internal IT infrastructure, staff, processes or applications to an external resource such as an Application Service Provider.

A Service Bureau is a specialized firm that offers scanning and/or data entry services, usually based on a per document price. Service Bureaus are located within the United States (“Onshore”), in Canada, Mexico, or the Caribbean (“Near shore”), or overseas, in Europe, South America, Asia-Pacific and India.

What is Business Process Outsourcing (BPO)?

BPO is the act of transferring some of an organization's repeated non-core and core business processes to an outside provider to achieve cost reductions while improving service quality. Because the processes are repeated and a long-term contract is used, outsourcing goes far beyond the use of consultants. If done well, BPO results in increasing shareholder value. The main difference between BPO and more traditional IT outsourcing is that BPO offers companies a way of achieving transformational outcomes much more quickly. In a typical BPO contract, a service provider takes over a specific corporate function. Effective BPO encompasses much more than just changing who is responsible for performing the process. In BPO, the outside provider not only takes on the responsibility to manage the function or business process, but also re-engineers the way the process has been traditionally done.