What is Offshore Outsourcing and what's the idea behind it?

As companies look to reduce costs, they invariably begin an investigation into offshore outsourcing. Typically, executives in North American companies review their operations and decide which tasks can best be handled in a foreign country, ideally paying less wages than in their own countries. The hourly wages, however, are not the only reasons. Benefits, holidays, and other perks are huge investments, so many businesses are trying to do whatever they can to eliminate and reduce these expenditures. But, exactly what is offshore outsourcing and what's the idea behind it?

Today, it is quite common to talk to technical support people and call centers that are thousands of miles away. The telephone companies are excellent examples of this growing trend. Years ago, when you spoke to an operator, she probably lived in your area and knew the crossroads and local landmarks. As time passed, however, you noticed that when you called for information or a telephone number, she no longer knew your area. The process had been streamlined so that no-one really lived in the same region as the caller. Then one day, you called and noticed that the person did not speak with the same vernacular or even the same accent as you. The reason for this was simple. The telephone company took the function to another country, effectively offshore outsourcing the whole department.

Another example are 1-800 numbers that manufacturing companies typically use to provide technical support to their customers for various product lines. Most of these inquiries are now conducted through offshore outsourcing. It is very rare to speak to someone in one's own country when trying to order a missing manual for a lawnmower, for instance. Likewise, when setting up appointments for service people to visit one's home, the appointment setter is likely to reside in India or the Philippines.

Although there are many benefits to outsourcing offshore, the idea behind the concept is most always cost. Companies can avoid labor laws and unions in their own countries, in favor of third world countries where the rules are not as strict, and where the people are accustomed to low salaries. In fact, these jobs seem heaven-sent in some cultures, as the pay is high compared to other types of jobs such as farming. Educated people in other countries are drawn to these positions. Plus, foreign governments provide attractive incentives that appeal to North American companies. These might be in the form of favorable tax laws, free buildings, and privileges not afforded to local businesses.

Further, offshore outsourcing does not necessarily mean on a large-scale basis. Many small business owners are benefiting from outsourcing their tedious daily work tasks to people in other countries. Again, they avoid the strict labor structures of North America. But, as new startups or small businesses with little cash flow find the idea of outsourcing offshore appealing, there are other reasons, too. Speed of finding people is one reason. It is so easy today to find someone to work on a project when a dilemma is encountered. With all the micro-job sites on the internet, business owners can have their projects completed in less time than it takes to advertise for someone at home.

Indeed, offshore outsourcing is a simple philosophy which means employing part-time, full-time, permanent or temporary staff from outside one's own country. The reasons for doing so are reduction of costs, streamlining business processes, and ease of operations.