Outsourcing, or contracting out, is normally defined as the procuring from and outside company some components of a business process that traditionally had been accomplished internally. The reasons for doing this are generally to lower cost and improve both quality and service. An example of would be a manufacturer of transmissions would outsource the heat-treating of gears. In order to attain better quality and lower cost, they may need to invest in better equipment. If the process can be effectively outsourced, then investment can be made in a more important part of the process.
Off shoring is another form of outsourcing where the transfer of work went to another country. This began to become a common practice in the 1980’s when U.S. automobile manufacturers were reengineering their processes to more effectively compete with Japanese automakers.
Today, outsourcing has made its way to service processes. Many computer companies have outsourced their help desk processes to companies in India. With lower cost of international calling and the relatively good English spoken by technically proficient Indians, service levels can remain high and be done at a fraction of the cost.
Another example would be a tax office in the U.S. that outsource the work of preparing forms for filing income taxes. Experts interview the client and gather the necessary documentation, and then a digitized file is transmitted to a firm in China to do the more mundane task of filling out the forms. Workers in China can be trained to do this proficiently at a much lower cost than in the U.S. The completed forms are electronically returned and are reviewed by a tax attorney prior to filing with the Internal Revenue Service.
The Internet, combined with workflow software, make it possible to outsource components of work from a business process in order to make it less expensive and more reliable. One of the largest opportunities for Chinese business is to identify these business processes and provide solutions using the growing number of skilled, English-speaking young people who are graduating from their schools.
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