What is Offshore Outsourcing?

Offshore outsourcing plainly means outsourcing your business process to one who is not on your shore (region) or who is beyond your shore. It is the exporting of your business associated jobs that usually can have been carried out by your in-house from your region to other parts of the globe where there are lower labour costs or tax savings, skilled human resource and good infrastructure.

Offshore outsourcing is the practice of hiring an external organization to perform some business functions in a country other than the one where the products or services are actually developed or manufactured.

The high-speed Internet connections across the globe has made it possible for outsourcing almost all business associated process to be carried out from anywhere in the world, a business trend that many economists call as globalisation. In general, by offshore outsourcing you not only try to save money in order to be more price-competitive against your rivals, but also it enables you to compete with other businesses across the globe.
Offshore outsourcing has revolutionized many industry sectors. Outsourcing offshore software development to countries like India, China, and Philippines are proving beneficial to the industries world over.

It can be contrasted with offshore outsourcing, in which the functions are performed in a foreign country by a foreign subsidiary. Opponents point out that the practice of sending work overseas by countries with higher wages reduces their own domestic employment and domestic investment. Many customer service jobs as well as jobs in the information technology sectors (data processing, computer programming, and technical support) in countries such as the United States and the United Kingdom – have been or are potentially affected.

Main Areas of Offshore Outsourcing

1. LPO – Legal outsourcing refers to the practice of a law firm or corporation obtaining legal support services from an offshore outside law firm or legal support Services Company.
2. Health Care – The driving factor behind the development of offshore outsourcing has been the need to cut costs while the enabling factor has been the global electronic internet network that allows digital data to be accessed and delivered instantly, from and to almost anywhere in the world.

One of the main factors influencing the beginnings of the offshore outsourcing movement were a combination of pressures to reduce labour costs, save on operational cost such as payroll, administrative cost, utilities and to improve productivity, and an expanding, economical labour in other countries. When companies outsource the idea is to save money if they can keep the prices of their product lower than competitors.

Countries and Area of Expertise

India	Full Spectrum Services	Nepal	Programming, Customer Support
Mexico	Full Spectrum Services	Bangladesh	Web & Software Programming Game Development IT Support Network Solutions
Ukraine	Programming and R&D	Bulgaria	Programming R&D
Bolivia	Web & Software Programming Game Development IT Support Network Solutions	Belarus	Programming R&D
Brazil	Web & Software Programming Game Development IT Support Network Solutions	Romania	Programming IT
Argentina	Web & Software Programming Game Development IT Support Network Solutions	the Philippines	Programming R&D Data Entry Customer Support
Indonesia	Programming, R&D, IT Support, Data Entry, Customer Support	Egypt	Customer Support Programming
China	Programming Data Entry Customer Support Finance & Accounting	Malaysia	Customer Support R&D
Philippines	Customer Support IT Support Programming Animation Transcription	Mauritius	ITO BPO
Russia	Programming R&D
Pakistan	Programming Customer Support
Panama	Programming, Customer Support

Impact of the Internet

The widespread use and availability of the Internet has enabled individuals and small businesses to contract freelancers from all over the world to get projects done at a lower cost due to lower wages and property prices. Crowd sourcing systems such as Mechanical Turk have added the element of scalability, allowing businesses to outsource information tasks across the Internet to thousands of workers.

This trend runs in parallel with the tendency towards outsourcing in larger corporations, and may serve to strengthen small business’ capacity to compete with their larger competitors capable of setting up offshore locations, or of arriving at major contracts with offshore companies. See Freelancing on the Internet.

Source of conflict

There are different views on the impact on the various societies affected, which reflects the attitude of Protectionism versus Free Trade. Some see it as a potential threat to the domestic job market in the developed world and ask for government protective measures (or at least closer scrutiny of existing trade practices), while others, including the countries who receive the work, see it as an opportunity. Free-trade advocates suggest economies as a whole will obtain a net benefit from labour offshore outsourcing, but it is unclear if the displaced receive a net benefit.

One issue offshore outsourcing of technical services has brought more attention to is the value of education as an alleged solution to trade-related displacements. Education may no longer be a comparative advantage of high-wage nations because the cost of education may be lower in the nations involved in the controversy. While it is true that education is usually considered helpful to competitiveness in general, an “education arms race” with low-wage nations may not pay off.

outsourceoffshore.info 2009

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