Offshore Outsourcing: A Budding Trend in the Global Market

  • April 23, 2011
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Beyond doubt, we have come a long way from the prehistoric sign language to the satellite communications. Time has shown how communication is essential for civilization and research has proven its endless evolution. In just a few years, the bulky telephone that was considered fashionable during its time has lost its fame to today’s thin cellular phones with manifold useful feaatures.

The communication revolution gained success in bridging the world, whereas one can communicate to anyone from the other side of the world. This long-distance connection has proven its use in any aspect of the modern world, from building personal relationships to bridging global unity. Its universal spread has indeed reached many fields, including the business circuit.

For years, offshore outsourcing has become an integral part of the business sector. Offshore outsourcing is the practice of sharing organizational control with a third party to manage some or all of the business processes in a foreign country. This principle exists because of the difference of skills and labor fees of people from different locations. Thus, if a certain country’s workforce can market their skills cheaper than others, then the country has the comparative advantage over other countries with equally qualified workforce but at higher prices.

Offshore outsourcing is usually referred to as offshoring. However, despite its similarity in context, there are essential technical contrarieties between the two. Offshore outsourcing, from the term itself, involves sharing organizational control with an external organization located in a foreign country. Offshoring, on the other hand, is the relocation of a business function to another country, regardless of whether the work is transferred to a third party or a foreign subsidiary of the same company.

Generally, work is transferred to another country to avail lower cost of operations. The recession of the global economy due to terrorism has motivated business professionals to cut costs. Many companies now recognize that they can attain the same quality work at notably lower prices than hiring domestic workforce. They find many countries with significantly skilled labor pool such as the Philippines, China, Russia and India. Fuelled by the global electronic network which lets digital data to be transferred immediately, offshore outsourcing has become popular in infotech sectors.

Presently, more and more companies have resorted to offshore outsourcing. Lower cost of operations, zero facility financing and less management problems are just a few of the advantages offered by this emerging industry. Also, it enables companies to focus in improving their product quality. This benefit is also enjoyed by the consumers, who avails of more high-quality products as competition for the global market grows larger.

Despite predictions to the contrary, offshoring has proven its victory in promoting trust between foreign companies. Its inevitable expansion, reinforced by the sophistication of communication is likely to develop further. Hence, the past few years of rapid growth of offshore outsourcing should give us a fairly good idea of what to expect in the years to come.

Sources:
http://en.wikipedia.org/wiki/Outsourcing
http://en.wikipedia.org/wiki/Offshore_outsourcing

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