Outsourcing, Global Sourcing, and Offshoring
13.4 Understand outsourcing, global sourcing, and offshoring.
When firms import needed goods or services, they engage in global sourcing. Before delving into this important topic, let’s first review outsourcing. Specifically, outsourcing refers to the procurement of selected value-adding activities, including production of intermediate goods or finished products, from external independent suppliers. Firms outsource because they are not superior at performing all value-chain activities, and it is more cost effective to outsource these activities. For example, Harley Davidson sources motorcycle helmets from suppliers in China.
Business process outsourcing (BPO) refers to the procurement of services. ...
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