What Does Outsourcing Really Mean?
Outsourcing means to have specific duties of your business handled by someone outside of your company. As an example, think of a hair salon that sends towels out for laundry rather than cleaning them in-house. This practice can often lead to work-at-home opportunities for those employed in the outsourced line of work.
Usefulness of Outsourcing
Typically outsourcing is done with an eye toward efficiency and cost-saving for the company. Outsourcing could be as simple as hiring a freelancer to edit a company newsletter or as large-scale as hiring an outsourcing company to handle all accounting and payroll functions.
Outsourcing can be when a company directly hires an independent contractor to provide service. Or, a company may hire an outsourcing company—such as Manpower—that either employs or contracts with workers to provide those services.
Business Process Outsourcing (BPO)
BPO stands for "business process outsourcing." BPO is frequently used to describe a company that is contracted to provide services or business processes to another company.
It might include manufacturing or back-office functions such as accounting and human resources. But BPO might also include front-end services such as customer care and technical support. "Global BPO" is another term for offshoring or outsourcing outside a company's home country or primary market. BPO jobs are not necessarily working at home, but some, like call centers, can be.
Offshoring is a form of outsourcing. Offshoring is when a company moves business processes or services to a country other than its home country or primary marketplace. It is usually done to cut costs. Typically the new country has lower labor costs.
Offshoring and outsourcing are not synonymous, though to many they have the same negative connotation. However, outsourcing can mean job opportunities for those who want to work from home.
The definition of homeshoring (also known as homesourcing), according to Dictionary.com, is "the transfer of service industry jobs to electronically connected home-based employees." So homeshoring is essentially turning office jobs into work at home jobs.
But homeshoring is different from offshoring because in homeshoring the home-based jobs are typically done within the country where the employer operates.
Homeshoring may or may not involve outsourcing, which is contracting for work to be done by a third party outside the company. If a company employs its home-based workers, then homeshoring is not outsourcing.
A company that uses U.S. home-based call center agents to take calls from within the U.S. is homeshoring. However, if the same U.S.-based company hired call center agents in India to take calls from U.S. customers, that would be offshoring.