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   Redefining Words:

   Outsourcing and

   Offshoring

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   For the fine print difference (briefly) in these two terms, according to economist Thomas Friedman, (and/or the present Scrabble hang-up) use the DOOR.

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   According to Thomas Friedman¹

Offshoring, which has been around for decades, is different from outsourcing².

Outsourcing means taking some specific, but limited, function that your company was doing in-house–such as research, call centers, or accounts receivable–and having another company perform that exact same function for you and then reintegrating their work back into your overall operation.

Offshoring, by contrast, is when a company takes one of its factories that it’s operating in Canton, Ohio, and moves the whole factory offshore to Canton, China. There, it produces the very same product in the very same way, only with cheaper labor, lower taxes, subsidized energy, and lower health-care costs.

   These two business activities are attractively enhanced by advances in electronic technology in our “flattening”–global–world. Friedman’s book is a great overview for the layman.

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   ¹ Thomas L. Friedman, The World Is Flat: A Brief History of the 21st Century (Farrar, Strauss and Giroux, 2005, p.114.)

   ² For the record, the Official Scrabble Online Dictionary, which considers and accepts many odd-ball worlds that cause consternation, hasn’t discovered or accepted “offshoring,” though “outsourcing” is legitimate. So? You can go to bed a bit better informed tonight…