Any business entity would need to perform various business processes or tasks to achieve its goals. Each process would utilize certain resources of the company, and the activities that consume more resources with very little desirable output would best be handled by companies which specialize in these chores. The company which provides the best results with the least expenses can be selected and contracted immediately.
This is the essence of outsourcing. It is based on the principle that no business firm can carry out all of its functions optimally and with the same competence as others. It works on the idea of specialization. It also provides certain global companies the environment to mutually coexist.
Thus, the idea of offshore outsourcing was born—when the client, buyer or outsourcer is contracting a service provider, vendor or supplier that is outside the country.
Some things to consider for a job to be sourced offshore are: the wage difference between the local workers and the offshore labor force; employees have the flexibility of working hours and location; the work itself has high information content, with straightforward setup, and can be repeated and transmitted over the Internet.
The moving force behind the evolution of offshore outsourcing has always been the need to reduce costs. What made this all possible were the World Wide Web and the global telecommunications network that allows information to be sent and received almost instantaneously from anywhere in the world—something that was impossible before the dawn of radio communications.
Many countries with huge number of workers who can provide quality service and are available at a lower cost (such as China, India and the Philippines) have been the central resource for offshore outsourcing the world over. These countries also have implemented laws that provide sound business environments for clients (such as Europe, Australia and the United States) to conduct their operations there, which likewise help in making their unemployment rates go down.
Thus, with this kind of setup everybody wins. Well, not quite. According to opponents of this business practice, the clients’ local workforce is usually the first to be hit by the offshore outsourcing boom. Domestic investment is also going down. But for clients, the lure of lower costs and more profit is naturally hard to ignore.
Ultimately, with the growing availability of cheap labor, legalized investments, advances in network and infrastructure, and the increasing need for cutting costs, offshore outsourcing is here to stay.
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