Outsourcing is the business practice in which the major or minor segments of one company’s operations are contracted out to a third party company or companies, based locally or even abroad in regions like the Philippines, that are proficient in those operations.

Companies employ this practice to take advantage of the following:
•    lower firm costs;
•    more focus on innovation or improvement of a particular business’ core competencies;
•    more efficient use of resources, such as land, labor, capital and technology.

Business operation segments typically outsourced are:
•    information technology;
•    human resources;
•    facilities and real estate management;
•    accounting, payroll and billing;
•    customer support;
•    customer service;
•    telemarketing;
•    market research;
•    manufacturing;
•    designing;
•    engineering;
•    multimedia development;
•    word processing.

Outsourcing that involves the contracting or relocation of those business operations to foreign countries, it is properly called off-shoring or offshore outsourcing, though in common usage the term “outsourcing” is used more frequently than “off-shoring”. The two terms are often interchanged in many public discussions and debate.

The word “outsourcing” became part of the business lexicon during the 1980s particularly when the General Motors Corporation; an automobile company known domestically in the United States to be committed to manufacturing its own auto components, were shifting to acquire auto components from outside suppliers. (Holusha, New York Times: 1981)

With the worldwide trend of globalization, the distinction between outsourcing and off-shoring will blur over time. In the recent years, a growing number of foreign business process outsourcing (BPO) companies from Asia are making their presence felt in North America and Europe. More and more US and European companies are turning to outsourcing for their major manufacturing processes and back office support to China, Taiwan, India and more successfully in the Philippines whose labor pool are well-adjusted to Western culture, accustomed to English language and proficient in Western business practices.

No longer the upstart business strategy or the global phenomena, outsourcing has now become the irreversible trend of how business around the world is done and on which a great cluster of companies and countries are now depending on for profit and prosperity.


  1. Greenhouse, Steven. “Outsourcing: Introduction”. 1993-2008. Microsoft Encarta Online Encyclopedia. Accessed 26 June 2008. Link here
  2. Holusha, John. “G.M. Shift: Outside Suppliers”. The New York Times. 14 October 1981, Financial Desk Late City Final Edition, Section D Page 1 Column 4.
  3. “Overview: Outsourcing” 28 May 2003. Wikipedia: The Free Encyclopedia. Accessed June 25 2008. Link here


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