Offshore Outsourcing

When business enterprises use the services of another organization for carrying out some of their functions, it is known as outsourcing. Outsourcing is possible within the country as well as outside the country.  Functions such as relationships with the client, financial services, human resource services, and marketing are the usual activities and services that are outsourced. But there are other production related activities as well that are outsourced to countries where labor is more diligent and more efficient. IT Support and Medical transcription is one of the other forms that has been outsourced for different reason. The difference in timing allows the people elsewhere to do work during their daytime, and thereby ensure round the clock functioning.

There are several advantages and disadvantages of outsourcing. Advantages include bringing down costs of operation through cheaper labor, and access to more specialized and skilled services. According to some studies, almost 40 percent of costs can be reduced by outsourcing. In addition to this, outsourcing can also create potential market, for which the outsourcing company would have to put in additional effort and resources. Small and medium sized enterprises are major gainers of outsourcing effort. Major disadvantages are loss of jobs for population within the country, possibility of litigation, possibility of loss of customer confidence, and possibility of loss of market share.

Outsourcing business activities to countries where labor is much cheaper than within the United States has been encouraged in the past through tax incentives, as it increases the profitability of the local companies, and thereby improves the overall economic scenario. Important Asian countries that offer services to outsourcing nations are India, China, Pakistan, Malaysia, Thailand, and Phillipines. Major countries that outsource their activities are the UK, and the US. After the disintegration of erstwhile Soviet Union, Russia has also emerged on the map of outsourcing.. Other smaller nations of former Soviet Union are also competing for doing job works. Holistic view is that when others have more disposable incomes, they will most certainly come to buy what we have to buy, so eventually, it is good for us.


India is one of the countries that is favored for outsourcing services and other functions. This is because most people in India know English, and there are quite skilled at these jobs because of the growth in training institutes. The growth in outsourcing to this country is expected to be at rate of 30 percent to 40 percent. Many other countries like Ukaraine are also expecting their business patterns to be in the same line. According to Forrester Research, 60 percent of the top 1000 companies on Forbes list have outsourced their activities. The research paper predicts that it will not be long when 100 percent of these companies will be outsourcing some function or the other to offshore companies. Eventually, the remuneration within the country and outside country will have to reach a ratio such that outsourcing is no longer a desirable option. Until then this trend may continue because as things stand, a graduate in India may be drawing anywhere between 1/5th to 1/10th of what his or her counter part is drawing in the United States.