Outsourcing, Insourcing, Off-Shoring and MoreCategory: Education & Learning, Increase Profits, Outsourcing
Posted by: George Simons on August 3, 2012
The term “outsourcing” has become a scapegoat this political season. But beyond the political hype, it is important to understand the long term benefits of outsourcing.
Just about every company outsources. From trash collection, to cleaning crews, to entire contact centers, no one does it all. In fact, outsourcing helps most companies remain competitive and in business. The U.S. is, for the most part, a service economy. We are a nation working for each other. So let’s understand what these “sourcing” terms mean:
- Outsourcing – Any function or task performed by a non-company employee. It is what GCS typically does.
- Insourcing – Choosing to do the work with company employees. Typically work that would have been outsourced.
- Offshoring – Any outsourcing done outside the United States, like the business we do in our facility in Eastwood.
- Inshoring – Moving an overseas business to the local country. For instance, Toyota, a Japanese company, builds cars in the U.S.
- Onshoring – Bringing work back to the domestic country.
- Nearshoring – Any outsourcing done in countries adjacent or near to the U.S. For example: Mexico, Puerto Rico or Jamaica.
In reality, smart companies engage in strategic right-sourcing. Right-sourcing is simply the process of choosing the best means to complete a task or service, either with direct employees or outsourced ones.
Outside of the political arena, none of these words should be seen as “dirty words.” Businesses survive by generating profits and they use outsource providers to help them increase revenue and lower costs – really to compete and grow. That growth often leads to more jobs both in the client and outsourced communities. Specialization allows companies to focus on doing one thing really well and often at a lower cost.
Even work that is off- or nearshored is beneficial. When a company outsources tasks, it typically lowers the overall costs for their products and services, which in turn reduces the price to the consumer. Lower prices mean more money in the consumer’s pocket for other products, which helps the economy grow. In turn, it creates consumers in other countries who want similar products and services for their families. That demand means more job growth.
Each company chooses the best rightsourcing strategy for their business model. Outsourcing business-related services helps companies get their work done faster and at a lower cost while freeing up other resources to focus on more strategic tasks. The benefits don’t just stop at the door of the business. They find their way back to the consumer.
For outsource providers like GCS, it means we have to recruit, train and perform those skills that are most valued in the marketplace. Good sales presentations, outstanding customer service and top quality, efficient back office processes require a dedicated and focused workforce that brings value to our clients.
Some people will continue to construe “outsourcing” as a negative thing. But the truth is outsourcing is taking place and it is generating meaningful economic activity, both in the U.S. and offshore – and you are a big part of it!