BPO

Archive for November, 2008

There are a lot of terms in the corporate world that people often confuse with one another. The problem with this is that it could cause miscommunication and that would spell bad news when it comes to transactions. A company should be able to explain its operations well. Two terms that are often confused with one another are contracting out and outsourcing. It is important that we are able to distinguish the difference between the two because they have completely different meanings.

Contracting out

Simply put, contracting out is one company purchasing goods or services from another company. This is very specific because the company informs its supplier exactly what it wants or how a service is to be performed. If in case the supplier does not perform its duties well, or the company finds another that would be of better service to them, the company may easily break ties with the supplier simply by breaking the contract.

For example, a company tells its supplier that it wants 300 pieces of Oak. The company would specify the exact weight and measurements of the wood, what should come with the wood, and how many people are to work on the said project.

Outsourcing

One of the most popular trends amongst companies nowadays is outsourcing. In this case, the company would turn the control over to the supplier as to how the operations would be done. The only concern of the buyer would be the end result. The buyer would not tell the supplier how to do the job because it would break the whole idea of outsourcing.

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