environment analysis of the BPO industry in india :: essays research papers

Introduction THE DEFINITION OF OFFSHORING AND OUTSOURCING There is no commonly accepted definition of â€Å"off shoring† in the public debate nor in the economic literature. However, the term â€Å"off shoring† is widely used as a particular subcategory of â€Å"outsourcing†. The latter has been defined as â€Å"the act of transferring some of a company’s recurring interval activities and decision rights to outside providers, as set in a contract†. The typical consequence of such a decision is a decline of employment in the plant/firm that is doing the â€Å"outsourcing† and a rise in employment in the plant/firm from which the supplies are sourced thereafter. The vagueness of the term is often related to the fact that it is not made clear if the change in sourcing of supplies refers to the plant level, the firm level or to the national level. The term â€Å"recurring interval activities† might include a given level of in-house supplies in a stagnant business environment, but the meaning is l ess clear in an expanding environment in which additional supplies from the outside do not necessarily result in an absolute reduction of employment but tend to limit its expansion. It is also useful to distinguish between a replacement of the supplies which takes place between plants of the same firm or from a non-affiliated firm (control-ownership), and whether the new sourcing is from plants in the home country or abroad (location). In certain cases, the sourcing decision goes hand-in-hand with new investment abroad, which leads some observers to focus the outsourcing debate on outright plant closures, with output being replaced by new greenfield investment abroad. Four types of â€Å"outsourcing† are reported, using location and control/ownership as distinguishing criteria: Ø  Ã‚  Ã‚  Ã‚  Ã‚  Captive onshore outsourcing implies a shift in intra-firm supplies to an affiliated firm in the home economy. Ø  Ã‚  Ã‚  Ã‚  Ã‚  If the shift in sourcing of supplies benefits a non-affiliated firm in the home economy, one can describe it as non-captive onshore outsourcing. The term â€Å"onshore† could be replaced in both cases by â€Å"local† or â€Å"domestic†. Ø  Ã‚  Ã‚  Ã‚  Ã‚  Captive offshoring describes a situation in which future supplies are sourced from an affiliated firm abroad. Ø  Ã‚  Ã‚  Ã‚  Ã‚  The fourth variant of outsourcing may be labeled non-captive offshoring and refers to the case when the new supplier is a non-affiliated firm and located abroad. A major problem with the definitions above is that they do not concord easily with officially collected economic data. Outsourcing decisions are made at the micro level of plants or firms, while the official data are generally collected at the sectoral and national level.