What does outsourcing mean?

Outsourcing refers to the dynamic allocation of functions and services of enterprises themselves and other enterprises, and the use of external resources to serve the internal production and operation of enterprises. Outsourcing is a strategic management mode, so-called outsourcing. At the end of the 20th century, in order to maintain the core competitiveness of the organization and because of the shortage of manpower, enterprises can entrust the non-core business of the organization to external professional companies, thus reducing operating costs, improving quality, concentrating human resources and improving customer satisfaction. Outsourcing industry is a new industry, which brings new vitality to enterprises.

Outsourcing, or outsourcing, is a business term that became popular in the 1960s and 1980s. This is one of the business decisions. It refers to entrusting non-core business to a specialized external third party for the purpose of saving costs, concentrating core business, making good use of resources and obtaining independent and professional services. Outsourcing and offshore outsourcing are often mixed, but outsourcing is mainly related to organizational structure adjustment, while offshore outsourcing emphasizes the country more. Of course, under the premise of globalization, these two concepts are not mutually exclusive. Fundamentally and historically, outsourcing is a term about organizing the labor within and between teams.

Extended data:

Outsourcing classification:

Classification by region: outsourcing can be divided into domestic outsourcing and offshore outsourcing according to the geographical distribution of suppliers.

1. Domestic outsourcing

Domestic outsourcing means that the outsourcing party and its outsourcing supplier come from the same country, so the outsourcing work is completed in China.

2. Offshore outsourcing

Offshore outsourcing means that the outsourcer and its suppliers come from different countries and the outsourcing work is completed internationally. Because of the differences in labor costs, outsourcers usually come from countries with higher labor costs, such as the United States, Western Europe and Japan, while outsourcing suppliers come from countries with lower labor costs, such as India, the Philippines and China.

Although domestic and offshore outsourcing have many similar attributes, they are quite different. Domestic outsourcing puts more emphasis on core business strategy, technology and professional knowledge, from fixed costs to variable costs and economies of scale, emphasizing value-added rather than cost reduction; Offshore outsourcing mainly emphasizes cost saving and the availability of skilled labor, and uses lower production costs to offset higher transaction costs. When considering whether to outsource offshore, cost is the decisive factor, followed by technical ability, service quality and service providers.

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