US companies have been outsourcing jobs and work for many years. What most of us don’t realize is that there are different forms of outsourcing. In today’s blog, I will outline for you some of the different forms of outsourcing.
- Multi-Sourcing: When companies utilize multi sourcing they find several qualified companies overseas to produce their product. This method promotes competitive pricing and eliminates the dependency of “one” company for the product.
- Nearshoring: When companies outsource their work to a nearby country it is called Nearshoring. An easy example of nearshoring is the practice US companies sending work to Mexico or Canada.
- Offshoring: Offshoring occurs when a job or work is moved to another country. An example of offshoring is textile jobs being shifted from the US to China. Offshoring is typically practiced because companies believe they will benefit from cheaper labor costs.
- Contracting Out: The practice of contracting out jobs overseas involves a company having jobs performed by another company or independent contractors.
- Captive Offshoring: When companies utilize captive offshoring they wholly own the center that is performing the work. Captive Centers are typically in lower cost countries and because the company owns the operation it eliminates the middleman.
- Subsidiary of an Offshore company: A subsidiary of an off shore company is part of a foreign company. When this approach is used the company is a sister company of the parent foreign company and realizes the benefit of the overall economical conditions of the parent company.
In my series of blogs I will explore each of these topics further. Stay tuned for next weeks blog where we will discuss the pros and cons of Multi-Sourcing!
Outsourcing Work ENG101H 