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Friday, January 16, 2009

Offshore Outsourcing Solution – A Favorable Offshoot of Globalization

Posted by james on November 18, 2008

Globalization has slowly been eliminating the dividing jurisdiction among countries even in economic ends. Today, local products are not the only things that can be shared by the world, the effects of globalization have already extended to the realm of manpower acquisition. Instead of sending workers to a foreign country having to provide relocation expenses that would go with same wage cost, the advent of Internet access and the computer technology has made it greatly possible to send the work or the function directly to the workforce while eliminating the need for relocation expenses and paying for much lower wage costs. The process of sending the work to distant off-country locations is popularly known as offshore outsourcing.

More big companies worldwide are now enticed with the idea of offshore outsourcing - the transmission of any of their system operations to a service provider based in a foreign country. This allows companies to reduce labor cost while being given outputs that adhere to the company’s specified standards Since most key market players are situated in first world countries where labor costs are very high, outsourcing to developing countries that require relatively lower compensation could prove to be the best resort. Hence, there are two main factors that are considered when adopting offshore outsourcing as a business strategy – the cost associated in outsourcing a specific operation and the quality of service that an outsourcing facility could provide.

The advantages of outsourcing can be generalized into three. First, the company who would choose to outsource a function would be able to focus on their core operations and are more likely to concentrate on ways to improve company procedures. Planning and budget estimation for operations to be outsourced will be eliminated. Instead, operational costs for the operations to be outsourced will also be fixed based on the market price of service providers. Second, the output quality level of those operations being outsourced will be increased. The competition of global service providers in their own specialties allows every company who seeks a service provider to choose from several facilities who could best give them optimal service at very reasonable prices. Factors that need to be considered when choosing a service provider would be the skills of a facility’s manpower, the kind of technology being utilized, and the accessibility to transportation, communication, and logistics. It is as if you are employing the best of employees that the world could offer. Lastly, expenses that for employee compensation would also be reduced significantly. Offshore outsourcing solution providers are generally located in developing countries where wage cost is relatively low and the number of unemployed skilled workers is high.

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