The word "outsourcing" is misused several times in ILW.COM's editorial. Outsourcing is defined as purchasing a business function or task from outside the
company, not country.
Offshoring is defined as purchasing a business function or task outside the country,
or performing a business function outside the country.
Outsourcing does not mean buying services in another country. As a matter
of fact, most US outsourcing is done
within the boundaries of the US. Companies choose to outsource because, some of the functions that the
company must perform, are outside the
company's areas of expertise. For instance, most companies, big and small, must outsource their payroll processing, to a company such as ADP Payroll Processing. A cement contractor might outsource payroll because
their area of expertise is cement
mixing, pouring, testing and whatever else goes into the cement business.
It would not make good business sense
for them to buy the computer equipment, hire the accounting experts and the
programmers just to keep all
functions in house.
In this example, since ADP Payroll Processing is an American Company, no jobs are lost to overseas companies.
A company may move some functions offshore for many reasons that have been discussed in several threads recently.
Offshoring is not outsourcing. Companies that move functions offshore may
still be keeping the function as part
of the company (but in a new location), or they may also outsource it if
they subcontract the services of a
company in a foreign country.
I hope you will make this little adjustment to your editorial, and help pass
it on to others in your discussions. Your editorial was quite informative, thank you.
Editor's Note: Offshoring is certainly more to the point that outsourcing, we used outsourcing in an informal sense.
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