Offshore outsourcing, a type of business process outsourcing (BPO), is the exporting of work from High wage Countries to lower wage where there is both political stability and lower labour costs or tax savings. Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Offshore simply means "any country other than your own." The Internet and high-speed Internet connections make it possible for outsourcing to be carried out anywhere in the world, a business trend economists call globalization.
Every department and every employee in your organization implies a capital cost. You need facilities, equipment, and of course, the staff that occupies that space and uses that equipment. Outsourcing makes the provision of workspace, equipment, and human capital somebody else’s problem.
There are two ways to increase profits, and most businesses try to implement them both. To improve profit, you can try to increase turnover, but as any business owner knows, that’s easier said than done.
Another approach is to look at costs and find ways to cut them. Fixed costs are a good place to start. These costs are the ones you incur to keep your doors open. And as the name implies, they remain an expense regardless of how much business you do. Rental, water and electricity, and wages are all fixed costs.
When you outsource, you only pay for outputs. During quiet times, you can reduce the cost of the product or service. After all, you won’t be using it as much as you otherwise would. On the other hand, if you do the work in-house, you have all the costs of providing for staff, facilities, and equipment whether you are using them to the full or not.
When an activity falls outside your core business, you may find yourself or your employees trying to multitask. For example, a manager becomes a marketer – but just what does he or she know about marketing? You and your employee face a learning curve, and learning curves are inefficient.
Outsourcing gets you access to expertise – and since the task you pass on to them is the core business of the organizations to which you outsource, they’re always on top of the game. There’s no wait time or down-prioritizing. They want to get the job done even more than you do!
Cost of living and what is considered to be an acceptable wage differs from country to country. A lot of businesses are finding that they can access better-qualified talent for less pay. And the companies and employees that take on the work are more than happy with what they earn. Like it or not, one person’s borderline wage is another person’s version of doing well.