At SmartCapitalMind, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.
Offshore outsourcing is the practice of hiring organizations or employees to perform company tasks overseas. For example, a company may manufacture and sell computer parts in the United States yet use offshore outsourcing to handle its customer service and technical support phone lines. Data entry is another job that is frequently outsourced overseas. The Internet has played a major role in outsourcing to other countries, not only allowing companies to outsource work to other organizations and hire employees that are some distance away, but also making is easier to hire freelance workers from around the world, getting projects completed for significantly lower fees.
Offshore outsourcing is often broken up into four main categories. The ITO category involves the overseas outsourcing of a company's information technology. The BPO category involves business process outsourcing, which can include call center management and claims processing. Software development falls under the Software R&D (research and development) category while KPO covers knowledge process outsourcing, which typically involves processes that require a higher level of skill, experience and/or knowledge. These things may include interpreting x-rays and researching investments; they may also include accounting-related tasks or even more technical jobs like engineering.
Often, offshore outsourcing get bad press when companies send work to other countries where they can pay lower wages than are typical in the country in which they are based. Opponents assert that outsourcing overseas takes jobs away from domestic employees and may even hurt the economy. However, this setup isn't criticized only for wages. Some consumers oppose this type of outsourcing as well, asserting that it leads to a decrease in quality, especially when it comes to customer service and technical support. For example, there may be a language barrier that leaves customers feeling less satisfied when dealing with an overseas call center.
Proponents of offshore outsourcing assert that such criticism may be displaced. For example, while some critics claim that overseas outsourcing is responsible for significant levels of job loss, some proponents point to recessions, dot-com fallout, and productivity growth as the real culprits. In fact, some critics claim that offshore outsourcing actually helps the economy in two ways. First, they assert that it lowers costs for everyone across the board. Second, they claim that it creates jobs by making the economy more efficient.
At this time, it looks as if overseas outsourcing will only grow with time. Some experts predict that about one-quarter of IT jobs will be overseas in a few years. However, many experts also suggest that companies proceed slowly and with caution to avoid the loss of talent and preserve performance. Additionally, some small businesses may find ways to use offshore outsourcing to make their businesses more competitive, especially in markets that are currently dominated by large corporations.