Outsourcing

Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that is often made to lower costs or focus on core competences. A related term, offshoring, means transferring work to another country, typically overseas. Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. Outsourcing became a popular buzzword in business and management in the 1990s. EDS was the first company to establish the outsourcing business.

Overview

Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider.

Outsourcing and/or out-tasking involve transferring a significant amount of management control to the supplier. Buying products from another entity is not outsourcing or out-tasking, but merely a vendor relationship. Likewise, buying services from a provider is not necessarily outsourcing or out-tasking. Outsourcing always involves a considerable degree of two-way information exchange, co-ordination, and trust.

Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Many companies look to employ expert organizations in the areas targeted for outsourcing. Business segments typically outsourced include Information Technology, Human Resources, Facilities and Real Estate Management and Accounting. Many companies also outsource customer support and call center functions, manufacturing and engineering. Outsourcing business is characterized by expertise not inherent to the core of the client organization.

The overhead costs of customer service are typically less where outsourcing has been used, leading to many companies, from utilities to manufacturers, closing their in-house customer relations departments and outsourcing their customer service to third party call centers. The logical extension of these decisions was of outsourcing labor overseas to countries with lower labor costs, this trend is often referred to as offshoring of customer service.

Due to this demand call centers have sprung up in Canada, China, Eastern Europe, India, Israel, Ireland, Pakistan, Philippines and even the Caribbean. Many companies, most notably Dell and AT&T Wireless, have gained significant negative publicity for their decisions to use non-US labor for customer service and technical support; one of the most prominent complaints being the expectation that the replacement staff will have more trouble communicating with customers.

A related term is out-tasking: turning over a narrowly-defined segment of business to another business, typically on an annual contract, or sometimes a shorter one. This usually involves continued direct or indirect management and decision-making by the client of the out-tasking business.

The term "outsourcing" became more well known largely because of a growth in the number of high-tech companies in the early 1990s that were often not large enough to be able to easily maintain large customer service departments of their own. In some cases these companies hired technical writers to simplify the usage instructions of their products, index the key points of information and contracted with temporary employment agencies to find, train and hire generally low-skilled workers to answer their telephone technical support and customer service calls. These agents generally worked in call centers where the information needed to assist the calling customer was indexed in a computer system. The agents were often not able to tell the customer they did not actually directly work for the original manufacturer. In some cases, the agents are not allowed to even give out their real name.

Outsourcing, Offshoring, and Offshore Outsourcing

Note that “outsourcing”, “offshore outsourcing” and “offshoring” are used interchangeably in public discourse despite important technical differences. To be consistent, “outsourcing”, in corporate context, represents an organizational practice that involves the transfer of an organizational function to a third party. When this third party is located in another country the term “offshore outsourcing” makes more sense. “Offshoring”, in contrast, represents the transfer of an organizational function to another country, regardless of whether the work stays in the corporation or not. In short, “outsourcing” means sharing organizational control with another organization, or a process of establishing network relations within an organizational field. "Offshoring”, on the other hand, represents a relocation of an organizational function to a foreign country, not necessarily a transformation of internal organizational control.

Arguments for Outsourcing

A recent poll of economists by the Wall Street Journal found that only 16 % of them saw outsourcing as having a significant impact on the overall job picture. [1]

One criticism of outsourcing is that product quality suffers. But the outsourcing firm has freedom to move a firm department or division back home if its profits are suffering as a result of poor quality. In fact, many American companies like Dell have moved customer service divisions back to America as a result of poor quality [2]. The decision to outsource is like any other business investment decision in that there is risk. Critics of outsourcing often talk about outsourcing failures without mentioning instances of outsourcing success. The decision to outsource is like the decision to expand a business overseas, to incorporate computer technology, or to hire new workers. If the company does it correctly, it benefits from higher profits. Proponents of outsourcing believe that arguing that outsourcing leads to lower product quality is pointless because if it were true, consumer demand will force firms to shift back to producing the good or service in-firm rather than out-firm. That many large businesses outsource and continue to outsource suggests that in many cases outsourcing is successful in that it increases product quality, lowers costs substantially, or both.

Some economists have argued that outsourcing is a form of technological innovation analogous to machines on a car assembly line. American Motor Company Ford relied heavily on workers in the past to assemble car parts. Today these workers are replaced by machines because they are cheaper in the long run, produce better quality products, or a combination of both (the firm is trying to increase its quality to cost ratio, quality being defined by the consumer and inferred from revenue). Economists argue that machines on the car assembly line must have a higher quality to cost ratio than workers because, if they didn’t, there would be no incentive for the firm to replace workers with machines. Although workers’ jobs were lost from this replacement of workers with machines, the Ford Motor Company made more money by lowering costs (or increasing quality, thereby increasing revenue). Some argue that greater profits to the labor owners lead to higher consumption, which leads to further job creation, allowing those who lost jobs to gain jobs in other sectors of the economy. However, economists do concede that labor is not always perfectly mobile and that some workers may have difficulty getting new jobs. Some economists suggest that government training programs be provided.

A firm's motivation for replacing workers with machines is identical to the motivation for outsourcing, i.e. the firm is trying to maximize the quality of its product given cost (its productivity). Because outsourcing allows for lower costs, even if quality reduces slightly or not at all, productivity increases, which benefits the economy on aggregate.

Economist Thomas Sowell from the University of Chicago said “anything that increases economic efficiency--whether by outsourcing or a hundred other things--is likely to cost somebody's job. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes.” [1] Walter Williams, another economist, said “we could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past--jobs such as elevator operator, TV repairman and coal deliveryman. ‘Creative destruction’ is a discovery process where we find ways to produce goods and services more cheaply. That in turn makes us all richer.” [2]

Professor Drezner reports that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. [3] Drezner also points out that large software companies such as Microsoft and Oracle have increased outsourcing and used the savings for investment and larger domestic payrolls. Nationally, 70,000 computer programmers lost their jobs between 1999 and 2003, but more than 115,000 computer software engineers found higher-paying jobs during that same period. [3]

Advocates of outsourcing also claim that outsourcing-related fraud is insignificant, averring that such malpractices can occur in any country. For example, 40 million credit card numbers were stolen in June 2005 at CardSystems Solutions in Tucson, Arizona. (See the full story.). In December 2005, nearly 50 people were indicted in connection with a scheme that bilked at least $200,000 from Katrina relief fund at Red Cross claim center in Bakersfield, Calif., which handled calls from storm victims.

Criticisms of Outsourcing

Because "outsourced" workers are not actually paid agents of the company, it has been argued that there is less incentive for the agent to show loyalty or work ethic in its representation of said company. It has been therefore argued that quality levels of customer service and technical support of outsourced tasks are lower than where they have remained 'in-house'.

The 2004 US presidential election race focused on outsourcing to some degree. This debate did not center on problems of declining quality of customer services but on the threat to US jobs and work. Criticism of outsourcing, from the perspective of US citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. A Zogby International poll reports that 71% of American voters believe that “outsourcing jobs overseas” hurts the economy and another 62% believe that the US government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource. The poll of over 1,000 Americans was conducted in August 2004 (See Zogby International survey results online at zogby.com).

Outsourcing appears to threaten the livelihood of domestic workers and the American Dream. This is especially true for high-tech workers who were promised the “jobs of tomorrow”- a phrase Bill Clinton iterated in 1994 to justify his conservative position on NAFTA. Outsourcing appears to work contrary to the claim that “free trade” will create the “jobs of tomorrow” in America when high-tech or high paying white collar jobs are transferred to or created in foreign countries. Thus, outsourcing is criticized as it represents a new threat to labor, contributing to rampant worker insecurity, and reflective of the general process of globalization where the United States government fails to mediate business-labor relations in a way conducive to prevailing values that places the American middle class worker as a central priority.

Criticism of outsourcing from the public and media sometimes tend to concentrate on lackluster customer service and technical support being provided by either local workers who are not actually employees of the company, or by overseas workers attempting to communicate with Americans in broken or incomprehensible English. Defenders of outsourcing say if this were true, then companies would experience market forces compelling them to return service and support handling back from the outsourced company. However, service and support are often not considered by customers as part of their original purchases. Customers only experience outsourced service and support after they have spent their money since sales is generally done in-house by the original company. Dealing with lackluster outsourced service is a negative surprise after the money is already spent.

Policy solutions to outsourcing are also criticized. One solution often offered is retraining of domestic workers to new jobs. However, some of these workers are already highly educated and already possess a bachelor's and master's degree. Retraining to their current level in another field may not be an option due to years of study and cost of education involved. There is also little incentive given that the jobs in their new field could also be outsourced as well. Proportions of workers trained for Science, Technology, Engineering, and Mathematics (STEM) fields fields in developing nations are viewed to outstrip traditional technology leaders such as the U.S. With these traditionally "safe" jobs perceived to be endangered, this raises questions regarding whether origin countries can maintain any comparative advantage given the losses in both low and high-value jobs.

There are also security issues concerning companies giving outside access to sensitive customer information. In April of 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when Indian call center workers in Pune, India, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank. (See the full report.)

Outright fraud is also a concern. In 2005, Intel discovered and fired 250 Indian employees after they faked their expense reports. The firings followed from Intel's internal Business Practice Excellence programme of expenses claims. The report concluded that fraudulent practises such as "faking bills to claim your allowances like conveyance [and] drivers’ salaries" were some common malpractices in India. Intel would not put up with such fraud. NASSCOM, which is a forum of IT and ITeS companies, has attempted to address these fraud concerns in India by creating the National Skills Registry. That database contains personal and work-related information, enabling employers to verify a staff member's credentials and allowing police to track the background of workers.

Democratic U.S. presidential candidate John Kerry blasted firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of US taxes during his unsuccessful 2004 campaign, calling such firms "Benedict Arnold corporations," in reference to the infamous traitor Benedict Arnold.

It is argued a malicious implementation of the Higher Education Role Analysis (HERA) in the UK may force Higher Education administrative and support staff to prematurely retire or seek for new employment in other organisations, thus freeing of staff many departments which could then be effectively outsourced. Outsourcing departments like Accounts, Payroll and Procurement is now common practice, as seen in August 2005 at the University of Portsmouth.

Notes

  1. ^  This view is borne out by a recent study by Richard Freeman at the National Bureau of Economic Research in Washington. He found that in the year 2000, 17 % of university bachelor degrees in the U.S. were in science and engineering compared with a world average of 27 % and 52 % in China. Universities in the European Union granted 40 % more science and engineering doctorates than the United States, with that figure expected to reach nearly 100 % by about 2010 according to Freeman's paper.
  2. 1. ^  “Outsourcing” and “Saving Jobs” by Thomas Sowell
  3. 2. ^  Should we “Save Jobs”? by Walter Williams
  4. 3. ^  "Outsourcing is the Kool" (kOOL PEOPLE)

Literature

Mark Kobayashi-Hillary. 2004. (2nd ed 2005) Outsourcing to India. ISBN 354023943X.


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(2nd ed 2005) Outsourcing to India. ISBN 354023943X. Three field hockey teams, Amsterdam, Pinoké and Hurley, and a basketball team, the Amsterdam Astronauts who play in the Dutch premier division and play their games in the Sporthallen Zuid, near the Olympic Stadium. 2004. The city also has a baseball team, the Amsterdam pirates who play in the Dutch Major League. Mark Kobayashi-Hillary. In speed skating many international championships have been fought in the 400-meter lane of this ice rink. Outsourcing departments like Accounts, Payroll and Procurement is now common practice, as seen in August 2005 at the University of Portsmouth. The Amstel Tijgers play in this arena in the Dutch ice hockey premier league.

It is argued a malicious implementation of the Higher Education Role Analysis (HERA) in the UK may force Higher Education administrative and support staff to prematurely retire or seek for new employment in other organisations, thus freeing of staff many departments which could then be effectively outsourced. Amsterdam also is home to a famous ice rink, the Jaap Eden baan. presidential candidate John Kerry blasted firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of US taxes during his unsuccessful 2004 campaign, calling such firms "Benedict Arnold corporations," in reference to the infamous traitor Benedict Arnold. The Olympic Stadium built for the occasion has been completely restored and is now used for cultural and sporting events. Democratic U.S. In 1928, Amsterdam hosted the Games of the IXth Olympiad. That database contains personal and work-related information, enabling employers to verify a staff member's credentials and allowing police to track the background of workers. The team shares that facility with the Amsterdam Admirals, an American football team.

NASSCOM, which is a forum of IT and ITeS companies, has attempted to address these fraud concerns in India by creating the National Skills Registry. Its home base is the modern stadium Amsterdam ArenA, located in the south-east of the city. Intel would not put up with such fraud. Amsterdam is the home town of Ajax, a team in the Dutch Football League. The report concluded that fraudulent practises such as "faking bills to claim your allowances like conveyance [and] drivers’ salaries" were some common malpractices in India. It handles about 42 million passengers a year and is home base to KLM. The firings followed from Intel's internal Business Practice Excellence programme of expenses claims. Schiphol, about twenty minutes by train from downtown Amsterdam, is the biggest airport in the Netherlands, and the fourth largest in Europe.

In 2005, Intel discovered and fired 250 Indian employees after they faked their expense reports. In the city centre, driving a car is complicated by traffic jams and limited and expensive parking space. Outright fraud is also a concern. Bike racks are ubiquitous throughout the city. (See the full report.). Most main streets have bike paths. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank. Many people in Amsterdam use a bicycle to get around.

In April of 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when Indian call center workers in Pune, India, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. (See also Gemeentelijk Vervoerbedrijf, Amsterdam metro.). There are also security issues concerning companies giving outside access to sensitive customer information. A new underground line, the North/South Line (Noord/Zuidlijn) is under construction. With these traditionally "safe" jobs perceived to be endangered, this raises questions regarding whether origin countries can maintain any comparative advantage given the losses in both low and high-value jobs. One incident was a planned bombing of the Venserpolder station, that led to a political scandal when mayor Ivo Samkalden and everyone in the city council, except for Roel van Duijn, instantly and erroneously blamed the left-wing protesters, which was exactly the objective of the right-wing bombers. Proportions of workers trained for Science, Technology, Engineering, and Mathematics (STEM) fields fields in developing nations are viewed to outstrip traditional technology leaders such as the U.S. The metro was still built (wall decorations at the Nieuwmarkt station are dedicated to the protests), but plans to build a highway through the neighbourhood in the centre of Amsterdam were abolished.

There is also little incentive given that the jobs in their new field could also be outsourced as well. During the construction of the Amsterdam metro, plans to demolish the entire Jewish neighbourhood near the Nieuwmarkt led to strong protests. Retraining to their current level in another field may not be an option due to years of study and cost of education involved. Public transport in Amsterdam consists of:. However, some of these workers are already highly educated and already possess a bachelor's and master's degree. Amsterdam's Hortus Botanicus, founded in the early 1600s, is one of the oldest botanical gardens in the world, with many old and rare specimens, amongst which the coffee plant that served as the parent for the entire coffee culture in Central and South America. One solution often offered is retraining of domestic workers to new jobs. Amsterdam's International Institute of Social History is one of the world's largest documentary and research institutions concerning social history, and especially the history of the labour movement.

Policy solutions to outsourcing are also criticized. Other institutions for higher education include an art school, De Rietveldacademie, the Hogeschool van Amsterdam, the Hogeschool voor Economische Studies Amsterdam and the Amsterdamse Hogeschool voor de Kunsten, which includes the Sweelinck Conservatorium. Dealing with lackluster outsourced service is a negative surprise after the money is already spent. Amsterdam has two universities: the University of Amsterdam (Universiteit van Amsterdam), and the Vrije Universiteit. Customers only experience outsourced service and support after they have spent their money since sales is generally done in-house by the original company. See also: List of mayors of Amsterdam. However, service and support are often not considered by customers as part of their original purchases. Local decisions are made at borough level, and only affairs pertaining to the whole city, such as major infrastructure projects, are handled by the central city council.

Defenders of outsourcing say if this were true, then companies would experience market forces compelling them to return service and support handling back from the outsourced company. The fifteenth, Westerpoort, covers the harbour of Amsterdam, has very few inhabitants, and is governed by the central municipal council. Criticism of outsourcing from the public and media sometimes tend to concentrate on lackluster customer service and technical support being provided by either local workers who are not actually employees of the company, or by overseas workers attempting to communicate with Americans in broken or incomprehensible English. Fourteen of these have their own council, chosen by a popular election. Thus, outsourcing is criticized as it represents a new threat to labor, contributing to rampant worker insecurity, and reflective of the general process of globalization where the United States government fails to mediate business-labor relations in a way conducive to prevailing values that places the American middle class worker as a central priority. The stadsdelen are responsible for many activities that previously had been run by the central city. Outsourcing appears to work contrary to the claim that “free trade” will create the “jobs of tomorrow” in America when high-tech or high paying white collar jobs are transferred to or created in foreign countries. However, unlike most other Dutch municipalities, Amsterdam is subdivided into fifteen stadsdelen (boroughs), a system that was implemented in the 1980s to improve local governance.

This is especially true for high-tech workers who were promised the “jobs of tomorrow”- a phrase Bill Clinton iterated in 1994 to justify his conservative position on NAFTA. As all Dutch municipalities, Amsterdam is governed by a mayor, his wethouders (aldermen), and the municipal council. Outsourcing appears to threaten the livelihood of domestic workers and the American Dream. Main article: Amsterdam (municipality). The poll of over 1,000 Americans was conducted in August 2004 (See Zogby International survey results online at zogby.com). The Westertoren also features the imperial crown. A Zogby International poll reports that 71% of American voters believe that “outsourcing jobs overseas” hurts the economy and another 62% believe that the US government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource. The crown was a sign of imperial protection and acted as a seal of approval for Amsterdam merchants abroad.

Criticism of outsourcing, from the perspective of US citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. The crown was awarded to the city in 1489 by Maximilian I, Holy Roman Emperor, out of gratitude for services and loans. This debate did not center on problems of declining quality of customer services but on the threat to US jobs and work. The lions were added in the sixteenth century. The 2004 US presidential election race focused on outsourcing to some degree. The city's official motto, Heldhaftig, Vastberaden, Barmhartig ("Valiant, Resolute, Merciful") which is displayed on the coat of arms, was bestowed on it by Queen Wilhelmina in 1947 in recognition of the city's bravery during World War II. It has been therefore argued that quality levels of customer service and technical support of outsourced tasks are lower than where they have remained 'in-house'. Historians believe they represent the three dangers which have traditionally plagued the city: flood, fire, and pestilence.

Because "outsourced" workers are not actually paid agents of the company, it has been argued that there is less incentive for the agent to show loyalty or work ethic in its representation of said company. The coat of arms of Amsterdam is composed of three St Andrew's crosses, aligned vertically, but rotated 90 degrees for the flag. In December 2005, nearly 50 people were indicted in connection with a scheme that bilked at least $200,000 from Katrina relief fund at Red Cross claim center in Bakersfield, Calif., which handled calls from storm victims. Most of the trees in Amsterdam were cut down for fuel. (See the full story.). Many inhabitants of the city had to travel to the countryside to collect food. For example, 40 million credit card numbers were stolen in June 2005 at CardSystems Solutions in Tucson, Arizona. In the last months of the war communication with the rest of the country broke down and food and fuel became scarce.

Advocates of outsourcing also claim that outsourcing-related fraud is insignificant, averring that such malpractices can occur in any country. Only 5,000 Jews survived the war. [3]. More than 80,000 Jews were deported to concentration camps, of whom perhaps the most famous was a young German girl, Anne Frank. Nationally, 70,000 computer programmers lost their jobs between 1999 and 2003, but more than 115,000 computer software engineers found higher-paying jobs during that same period. The Germans installed a Nazi civilian government in Amsterdam that cooperated in the persecution of Jews. [3] Drezner also points out that large software companies such as Microsoft and Oracle have increased outsourcing and used the savings for investment and larger domestic payrolls. Germany invaded the Netherlands in 10 May 1940, taking control of the country after five days of fighting.

Professor Drezner reports that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. In riots caused by the shortages several people were killed. That in turn makes us all richer.” [2]. Amsterdam suffered a food shortage and heating fuel became scarce. ‘Creative destruction’ is a discovery process where we find ways to produce goods and services more cheaply. During World War I, the Netherlands remained neutral. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes.” [1] Walter Williams, another economist, said “we could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past--jobs such as elevator operator, TV repairman and coal deliveryman. Shortly before the First World War the city began expanding and new suburbs were built.

Economist Thomas Sowell from the University of Chicago said “anything that increases economic efficiency--whether by outsourcing or a hundred other things--is likely to cost somebody's job. Amsterdam's population grew significantly during this period. Because outsourcing allows for lower costs, even if quality reduces slightly or not at all, productivity increases, which benefits the economy on aggregate. New museums, a train station, and the Concertgebouw were built. the firm is trying to maximize the quality of its product given cost (its productivity). The end of the 19th century is sometimes called Amsterdam's second Golden Age. A firm's motivation for replacing workers with machines is identical to the motivation for outsourcing, i.e. Between 1850 and 1900 population doubled to about 500,000.

Some economists suggest that government training programs be provided. They gave the economy a big boost. However, economists do concede that labor is not always perfectly mobile and that some workers may have difficulty getting new jobs. Both projects improved communication with the rest of Europe and the world dramatically. Some argue that greater profits to the labor owners lead to higher consumption, which leads to further job creation, allowing those who lost jobs to gain jobs in other sectors of the economy. The Amsterdam-Rhine Canal was dug to give Amsterdam a direct connection to the Rhine and the North Sea Canal to give the port a shorter connection to the North Sea. Although workers’ jobs were lost from this replacement of workers with machines, the Ford Motor Company made more money by lowering costs (or increasing quality, thereby increasing revenue). At the end of the 19th century the Industrial Revolution reached Amsterdam.

Economists argue that machines on the car assembly line must have a higher quality to cost ratio than workers because, if they didn’t, there would be no incentive for the firm to replace workers with machines. In Amsterdam new developments were started by people like Sarphati who found their inspiration in Paris. Today these workers are replaced by machines because they are cheaper in the long run, produce better quality products, or a combination of both (the firm is trying to increase its quality to cost ratio, quality being defined by the consumer and inferred from revenue). However, with the establishment of the Kingdom of the Netherlands in 1815, things slowly began to improve. American Motor Company Ford relied heavily on workers in the past to assemble car parts. During the Napoleonic Wars Amsterdam's fortunes reached their lowest point. Some economists have argued that outsourcing is a form of technological innovation analogous to machines on a car assembly line. The wars of the Dutch Republic with the United Kingdom and France took their toll on Amsterdam.

That many large businesses outsource and continue to outsource suggests that in many cases outsourcing is successful in that it increases product quality, lowers costs substantially, or both. The 18th and early 19th centuries saw a decline in Amsterdam's prosperity. Proponents of outsourcing believe that arguing that outsourcing leads to lower product quality is pointless because if it were true, consumer demand will force firms to shift back to producing the good or service in-firm rather than out-firm. During the century before World War II it almost quadrupled, but then remained fairly constant again to this day. If the company does it correctly, it benefits from higher profits. Thereafter, the population did not change much for another century and a half. The decision to outsource is like the decision to expand a business overseas, to incorporate computer technology, or to hire new workers. The population grew from slightly over 10,000 around 1500 to 30,000 around 1570, 60,000 around 1600, 105,000 in 1622 and almost 200,000 around 1700 (a twenty fold increase in 200 years).

Critics of outsourcing often talk about outsourcing failures without mentioning instances of outsourcing success. Amsterdam's stock exchange was the first to trade continuously. The decision to outsource is like any other business investment decision in that there is risk. Amsterdam was the most important point for the trans-shipment of goods in Europe and it was the leading financial centre of the world. In fact, many American companies like Dell have moved customer service divisions back to America as a result of poor quality [2]. These companies acquired the overseas possessions which formed the seeds of the later Dutch colonies. But the outsourcing firm has freedom to move a firm department or division back home if its profits are suffering as a result of poor quality. Amsterdam's merchants had the biggest share in the VOC and WIC.

One criticism of outsourcing is that product quality suffers. Ships sailed from Amsterdam to North America, Africa and present-day Indonesia and Brazil and formed the basis of a worldwide trading network. [1]. In the early 17th century Amsterdam was the richest city in Europe. A recent poll of economists by the Wall Street Journal found that only 16 % of them saw outsourcing as having a significant impact on the overall job picture. The 17th century is considered Amsterdam's "Golden Age". "Offshoring”, on the other hand, represents a relocation of an organizational function to a foreign country, not necessarily a transformation of internal organizational control. It was the rich, refined migrants from Flanders who set the tone (their Brabant dialects became the basis of standard written Dutch) and made Holland a mercantile power.

In short, “outsourcing” means sharing organizational control with another organization, or a process of establishing network relations within an organizational field. The Dutch Republic became known for its relative religious tolerance and Jews from Spain and Portugal, prosperous merchants from Antwerp (economic and religious refugees from the part of the Low Countries still controlled by Spain), Huguenots from France (persecuted for their religion) sought safety in Amsterdam. “Offshoring”, in contrast, represents the transfer of an organizational function to another country, regardless of whether the work stays in the corporation or not. The 16th century brought a rebellion by the Dutch against Philip II of Spain and his successors, escalating into the Eighty Years' War which ultimately led to Dutch independence. When this third party is located in another country the term “offshore outsourcing” makes more sense. From the 14th century on, Amsterdam flourished, largely on the basis of trade with the cities of the Hanseatic League. To be consistent, “outsourcing”, in corporate context, represents an organizational practice that involves the transfer of an organizational function to a third party. It was given city rights in 1300 or 1301.

Note that “outsourcing”, “offshore outsourcing” and “offshoring” are used interchangeably in public discourse despite important technical differences. The damming of the river Amstel gave it its name. In some cases, the agents are not allowed to even give out their real name. According to legend Amsterdam was founded by two Frisian fishermen, who landed on the shores of the Amstel in a small boat with their dog. The agents were often not able to tell the customer they did not actually directly work for the original manufacturer. Amsterdam was founded as a fishing village in the 13th century. These agents generally worked in call centers where the information needed to assist the calling customer was indexed in a computer system. Main article: History of Amsterdam.

In some cases these companies hired technical writers to simplify the usage instructions of their products, index the key points of information and contracted with temporary employment agencies to find, train and hire generally low-skilled workers to answer their telephone technical support and customer service calls. . The term "outsourcing" became more well known largely because of a growth in the number of high-tech companies in the early 1990s that were often not large enough to be able to easily maintain large customer service departments of their own. Although Amsterdam is the capital of the Netherlands, it is neither the capital of the province in which it is located, North Holland (which is Haarlem), nor the seat of government (which is The Hague). This usually involves continued direct or indirect management and decision-making by the client of the out-tasking business. Notable are also its red-light district, de Wallen, and its numerous "coffee shops" selling cannabis. A related term is out-tasking: turning over a narrowly-defined segment of business to another business, typically on an annual contract, or sometimes a shorter one. The city is noted for many outstanding museums, including the Rijksmuseum, the Van Gogh Museum, the Stedelijk Museum, Rembrandt House Museum, the Anne Frank House, and its world-class symphony orchestra, the Concertgebouworkest, whose home base is the Concertgebouw.

Many companies, most notably Dell and AT&T Wireless, have gained significant negative publicity for their decisions to use non-US labor for customer service and technical support; one of the most prominent complaints being the expectation that the replacement staff will have more trouble communicating with customers. Some of the narrow brick houses are gradually sinking because they are built on piles to cope with the marshy subsoil. Due to this demand call centers have sprung up in Canada, China, Eastern Europe, India, Israel, Ireland, Pakistan, Philippines and even the Caribbean. Many fine houses and mansions are situated along the canals; most are lived in, others are now offices, and some are public buildings. The logical extension of these decisions was of outsourcing labor overseas to countries with lower labor costs, this trend is often referred to as offshoring of customer service. At this time, a series of concentric, semi-circular canals were built around the older city centre, which still defines its layout and appearance today. The overhead costs of customer service are typically less where outsourcing has been used, leading to many companies, from utilities to manufacturers, closing their in-house customer relations departments and outsourcing their customer service to third party call centers. Amsterdam has one of the largest historic city centres in Europe, dating largely from the 17th century, the Golden Age of the Netherlands, of which it was the focal point.

Outsourcing business is characterized by expertise not inherent to the core of the client organization. As of 2005, the population of the city proper is 742,951[1]; the population of the greater Amsterdam area is approximately one and a half million. Many companies also outsource customer support and call center functions, manufacturing and engineering. Founded in the late 12th century as a small fishing village on the banks of the Amstel, it is now the largest city in the country and its financial and cultural centre. Business segments typically outsourced include Information Technology, Human Resources, Facilities and Real Estate Management and Accounting. Amsterdam, () the capital of the Netherlands, lies on the banks of two bodies of water, the IJ bay and the Amstel river. Many companies look to employ expert organizations in the areas targeted for outsourcing. ^  City of Amsterdam statistics service in Dutch.

In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Cannabis Cup, mid-November annual cannabis competition, hosted by High Times. Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. Sail Amsterdam, a five-yearly event, when tall ships from all over the world can be visited. Outsourcing always involves a considerable degree of two-way information exchange, co-ordination, and trust. Amsterdam Marathon, mid-October. Likewise, buying services from a provider is not necessarily outsourcing or out-tasking. Amsterdam Pride, mid-August, gay pride weekend.

Buying products from another entity is not outsourcing or out-tasking, but merely a vendor relationship. International music festival. Outsourcing and/or out-tasking involve transferring a significant amount of management control to the supplier. Amsterdam Roots, last week of June. Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider. Uitmarkt, last weekend in August, the start of the cultural season. . Koninginnedag, Queen's day, 30 April, the former Queen's (Juliana) birthday.

EDS was the first company to establish the outsourcing business. a Fast Flying Ferry towards Velsen-Zuid on the North Sea shore. Outsourcing became a popular buzzword in business and management in the 1990s. several ferries for pedestrians and cyclists across the IJ (free of charge). Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. 55 bus lines (not included regional and national lines). A related term, offshoring, means transferring work to another country, typically overseas. An express tram line (IJtram).

Outsourcing is a business decision that is often made to lower costs or focus on core competences. 16 tram lines. Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. 3 metro lines and 1 light rail line, together the Amsterdam metro. ^  "Outsourcing is the Kool" (kOOL PEOPLE). national and international train connections. 3.

^  Should we “Save Jobs”? by Walter Williams. 2. ^  “Outsourcing” and “Saving Jobs” by Thomas Sowell. 1.

Universities in the European Union granted 40 % more science and engineering doctorates than the United States, with that figure expected to reach nearly 100 % by about 2010 according to Freeman's paper. were in science and engineering compared with a world average of 27 % and 52 % in China. He found that in the year 2000, 17 % of university bachelor degrees in the U.S. ^  This view is borne out by a recent study by Richard Freeman at the National Bureau of Economic Research in Washington.

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