Offshore outsourcing is the practice of hiring
an external organization to perform some business
functions in a country other than the one where the
product or service will be sold or consumed.
Outsourcing has increased at a rapid pace due to the advancement in modern satellite
and Internet technologies, better connectivity and a constant search for less
expensive labour to cut costs and achieve competitive advantage. By outsourcing
their back office business processes to less expensive nations like China, India,
Philippines, Malaysia, companies can cut labour costs, concentrate on their core
businesses and strengths, and ensure better customer satisfaction. According
to a recent report, US firms have saved nearly US$8 billion through outsourcing
to developing nations like the Philippines. There are many developing nations
that act as offshore outsourcing destinations to developed nations. Some of the
countries that can be considered as offshore outsourcing destinations are as
follows:
The Philippines' key competitive advantage
is its people. Philippines has a well-educated
English speaking work force and stands
out as the world's third largest English
speaking nation. The attitude, commitment,
community, and education constitute the
key competitive advantage especially in
the front office operations such as customer
service and sales.
The Philippines boasts of a huge pool of
productive, trainable and multi-skilled labour
force. Filipino Outsourcing companies such
as AOV Outsourcing service only hire workers
that are highly qualified for various outsourcing
tasks.
Government support and the IT infrastructure
is a given. Major companies that already
operate in the Philippines include AIG, AOL,
Barnes & Noble, Chevron, Citigroup, Dell,
HP, HSBC, IBM, Intel, JPMorgan Chase, Motorola,
Procter & Gamble, Siemens AG and Trend
Micro.
In recent years, China is rapidly emerging as one
of the world's leading suppliers of offshore software
outsourcing services due to its incredible development
rate. Although India is at the moments the world
leader in software outsourcing industry, China
aims to outpace India and become the next dominant
competitor in software outsourcing. It is predicted
that China will emerge as one of the top three
countries for overseas software outsourcing between
2007 and 2010. Companies are already beginning
to plan their offshore outsourcing strategies to
take advantage of China's emerging strength as
an outsourcing centre. This includes looking for
ways to take advantage of the country's current
software strengths. Some estimates state that China
outsourcing could rival India as the leading offshore
IT services market as early as 2007.
The recent flurry of activity that helped put China on the outsourcing map came about partly as a result of government support and promotion, partly because of Japan's push to move much of its software development work to China, and partly because a number of large foreign companies -- GE, Microsoft, Dell, SAP and HP, for example -- started up R&D centres in China.
One of the major players in the offshore outsourcing industry, India has a well educated, talented, low cost and English speaking workforce, excellent IT and networking infrastructure, a fairly stable political scenario, friendly laws and well laid taxes and quality certified software firms. The offshore outsourcing market in India is ever growing and has produced many success stories making India a popular offshore outsourcing destination for IT related and other BPO services.
Offshore assignments have moved up the value chain - from data entry to large and complex turnkey projects of 200 to 300 person years. Almost any service can be outsourced to India, be it healthcare, engineering or KPO.
Malaysia's well-developed infrastructure, attractive business environment and strong government support makes it a rising alternative to India and China. The government's positioning of Malaysia as a hub for services and technology innovation has resulted in a number of multinationals locating some of its global or regional operations in Malaysia. Malaysia has a relatively more stable political climate backed by consistent economic growth which makes it attractive for sensitive, high end applications in banking and finance. © 2007 Amy Smith. All Rights Reserved