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Please help improve this article by adding citations to reliable sources. Unverifiable material may be challenged and removed. | 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 actully developed or manufactured. It can be contrasted with offshoring, 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 infotech sectors (data entry, computer programming, and customer support) in countries such as the United States and the United Kingdom - have been or are potentially affected. Image File history File links Question_book-3. ...
This article is about a term used in economics. ...
Offshore may refer to oil and natural gas production at sea; see oil platform. ...
A wage is the amount of money paid for some specified quantity of labour. ...
Wikipedia does not yet have an article with this exact name. ...
Data processing is any process that converts data into information. ...
Tech Support is the modern term for assistance with electronics or software, usually computer related. ...
Types There are four basic types of offshore outsourcing: - ITO — information technology outsourcing
- BPO — business process outsourcing covers things like running call centers, processing insurance claims.
- Software R&D — offshore software development
- KPO - knowledge process outsourcing covers things that require a higher skill set such as reading X-Rays, performing investment research on stocks and bonds, handling the accounting functions for a business or executing engineering design projects.
Business Process Outsourcing (BPO) is the leveraging of technology or specialist process vendors to provide and manage an organisations critical and/or non-critical enterprise processes and applications. ...
Offshore programming (also offshore software development, offshore software R&D) is provision of software development services by an external supplier positioned in a country that is geographically remote from the client enterprise; a type of offshore outsourcing. ...
Knowledge Process Outsourcing (KPO) is a form of outsourcing. ...
Criteria The general criteria for a job to be offshore-able are: - There is a significant wage difference between the original and offshore countries;
- The job can be telework;
- The work has a high information content;
- The work can be transmitted over the internet;
- The work is easy to set up;
- The work is repeatable.
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. Telecommuting, telework, or Working From Home (WFH) is a work arrangement in which employees enjoy flexibility in working location and hours (within limits). ...
Countries involved Some of the major countries/districts that provide such services are India ( Full Spectrum Services ), Indonesia (Programming, Data Entry, Customer Support), China (Programming), Philippine (Customer Support, Programming, Animation, Transcription), Russia (Programming and R&D), Pakistan (Programming, Customer Support), Panama (Programming, Customer Support), Nepal (Programming, Customer Support), Bangladesh (Web & Software Programming,Game Development,IT Support,Network Solutions,Offshore Outsourcing Service), Bulgaria (Programming and R&D), Ukraine (Programming and R&D), Belarus (Programming, R&D), Romania (Programming and IT), the Philippines (Programming, R&D, Data Entry and Customer Support), Egypt (Customer Support and Programming), Malaysia (Customer Support and R&D), and many others.
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. This trend runs in parallel with the tendency towards big corporations' outsourcing, and may serve to strengthen small business' capacity to compete with their bigger competitors capable of setting up offshore locations or of arriving at major contracts with offshore companies. See Freelancing on the Internet. A freelancer or freelance worker is a person who pursues a profession without a long-term commitment to any one employer. ...
In economics, business, and accounting, a cost is the value of inputs that have been used up to produce something, and hence are not available for use anymore. ...
A small business may be defined as a business with a small number of employees. ...
// Freelancer Websites The advent of the Internet has created new opportunities for freelancing, particularly for software developers from countries with low average salaries. ...
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 labor offshoring, but it is unclear if the displaced receive a net benefit. Protectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports, and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over...
Free trade is an economic concept referring to the selling of products between countries without tariffs or other trade barriers. ...
One issue offshoring 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. [1] 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. In economics, David Ricardo is credited for the principle of comparative advantage to explain how it can be beneficial for two parties (countries, regions, individuals and so on) to trade if one has a lower relative cost of producing some good. ...
The term arms race in its original usage describes a competition between two or more parties for military supremacy. ...
Sources Economist.Com Recommendations from November 11, 2004 Special Survey Edition
For a new topic, outsourcing has produced a huge volume of research, not all of it worthwhile. Here is a sprinkling of some of the better stuff:
From the McKinsey Global Institute
“Offshoring: Is It a Win-Win Game?”, August 2003
“New Horizons: Multinational Company Investment in Developing Economies”, October 2003
“Can Germany Win from Offshoring?”, Diana Farrell, July 2004
“Exploding the Myths of Offshoring”, Martin Baily and Diana Farrell, July 2004
From the Boston Consulting Group
“China: The Pursuit of Competitive Advantage and Profitable Growth”, July 2003
“Capturing Global Advantage”, April 2004
Academia
“The New Wave of Outsourcing”, Ashok Deo Bardham and Cynthia Kroll, University of California at Berkeley, Fisher Centre for Real Estate and Urban Economics Research Report, Fall 2003
“Globalisation of IT Services and White Collar Jobs: The Next Wave of Productivity Growth”, Catherine Mann, Institute for International Economics, December 2003
From The Brookings Institute
“Offshoring Service Jobs: Bane or Boon - and What to Do?”, Lael Brainard and Robert Litan, April 2004
“Offshoring, Import Competition, and the Jobless Recovery”, Charles Schultze, August 2004
“The Outsourcing Bogeyman”, Daniel Drezner, Foreign Affairs, May/June 2004
“Hardheaded Optimism About Globalisation”, Amar Bhide, Columbia University, forthcoming
From the Bureau of Labour Statistics
“Occupational Employment Projections to 2012”, Daniel Hecker, Monthly Labour Review, February 2004
“The 1988-2000 Employment Projections: How Accurate Were They?”, by Andrew Alpert and Jill Auyer, Occupational Outlook Quarterly, Spring 2003
From Forrester
“3.3m US Services Jobs To Go Offshore”, John McCarthy, November 2002
“Low-Cost Global Delivery Model Showdown”, John McCarthy, August 2004
“Two Speed Europe: Why 1 Million Jobs Will Move Offshore”, Andrew Parker, August 2004
See also Outsourcing became part of the business lexicon during the 1980s and refers to the delegation of non-core operations from internal production to an external entity specializing in the management of that operation. ...
Offshore may refer to oil and natural gas production at sea; see oil platform. ...
Nearshoring (or nearsourcing, nearshore outsourcing) is a concept for the form of outsourcing in which business processes are relocated to locations which are, generally, cheaper and yet geographically nearer. ...
The globally integrated enterprise is a term coined in 2006 in the name of Sam Palmisano, CEO of IBM Corp, used to denote is a company that fashions its strategy, its management, and its operations in pursuit of a new goal: the integration of production and value delivery worldwide. ...
International trade - an overview Absolute advantage Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) APEC Autarky Balance of trade barter Bilateral Investment Treaty (BIT) Bimetallism branch plant Bretton Woods Conference Bretton Woods system British timber trade Cash crop Comparative advantage Continental trading bloc Cost, insurance and freight Currency...
// Freelancer Websites The advent of the Internet has created new opportunities for freelancing, particularly for software developers from countries with low average salaries. ...
A Labor shortage is an economic condition in which there are insufficient qualified candidates (employees) to fill the market-place demands for employment at any price. ...
Free trade is one of the most controversial topics of the 20th and 21th century. ...
It has been suggested that this article or section be merged into Offshoring. ...
Borderless Selling is the process of selling services to clients outside the country of origin of services through modern methods which eliminate the actions specifically designed to hinder international trade. ...
A foreign worker (cf expatriate), is a person who works in a country other than the one of which he or she is a citizen. ...
Offshoring describes the relocation of business processes from one country to another. ...
Business Process Outsourcing (BPO) is the leveraging of technology or specialist process vendors to provide and manage an organisations critical and/or non-critical enterprise processes and applications. ...
Offshore programming (also offshore software development, offshore software R&D) is provision of software development services by an external supplier positioned in a country that is geographically remote from the client enterprise; a type of offshore outsourcing. ...
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