Outsourcing is one of those terms that is widely used but doesn't really have a common definition. There is a difference between buying/selling goods and services, and engaging an outsourcer.
Outsourcing means bringing in a third party to co-run a part of your business operations. The outsourcer is at the helm of an integral aspect of your core business services or delivery channel. Outsourcing also means that your customers and employees should not and will not differentiate whether the service is being provided by you or an outsourcer. http://en.wikipedia.org/wiki/Outsourcing; http://www.adp.ca/en/resource/outsource.html
In the same way that your customers don't expect an ATM to dispense cash when the power is off, they do expect the ATM to dispense cash and keep their financial records straight when the power is on. Therefore the utility company is not an outsource service provider, but an ATM maintence and cash replenishment company is.
Hiring a company to write a new software application is not outsourcing, but having the same company run a system in production is.
Records management is outsourcing, but shredding is not.
Employee Assistance Programs suppliers are not outsourcers, but Employee Call Centres are.
And so on.....
Constantly desciphering some of the lingo about outsourcing is starting to get under my skin. The terms ITO and BPO - IT outsourcing and Business Process outsourcing -are in common use and are descriptive tags for a broad subject matter.
Even though I am an expert of the subject of outsourcing, sometimes when I read about the latest and greatest in outsourcing, I get the same feeling as you get when you go into an upscale coffee bar and apparently don't know how to order a cup of coffee. In the same way the barrista distainfully corrects your order with insider terms like "west coast dry" or "non fat", sometimes I have to re-read the article to figure out what the terminology means.
Bear in mind that I am absolutely passionate about the subject of outsourcing to improve business performance. But when the "in the know" people casually toss off terms like LPO, KPO, HRO, ISO, ITO, FAO, MRO - I find that a bit of "lingo-fatigue" is starting to creep in. Although these terms are an attempt to be descriptive, the actual outcome is often the opposite.
Not to say that there aren't some excellent papers out there such as CORE's research paper on the Canadian outsourcing market http://www.core-outsourcing.org/PDF/John%20Simke%20Presentation.pdf; TPI's research on KPO http://www.tpi.net/pdf/researchreports/KPO_ResearchReport_july07.pdf or CAT Institute's paper on ISO http://cat.inist.fr/?aModele=afficheN&cpsidt=3235819 . For anyone with the time and energy to invest, there is a wealth of information out there to educate yourself on the topic.
If you want to sell an idea, strategy or a service, making yourself understood is a good place to start. This doesn't mean expecting your listener or reader to figure out what you're talking about.
Does anyone else feel the same way?
Linda Tuck Chapman is an outsourcing advisor with ONTALA Performance Solutions Ltd., and can be contacted at ontala@rogers.com.