Offshore Outsourcing

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Offshore Outsourcing: Pros and Cons

Offshore outsourcing in not a new thing, it has been around for many years. Advances in networks, communications and a strong focus on corporate bottom lines have created a higher demand for offshore outsourcing. There are several articles and write ups about the cost advantages of offshore outsourcing with a majority claiming anywhere between 40-50% savings, but is this a short-term or long-term estimate? It promises significant improvements in business performance while reducing operating costs, but does it take every factor into consideration?

A major benefit of offshore outsourcing is that it allows a firm to continue to be competitive with savings on low cost labor. With the standard wages being so much lower in other countries, like in India, it allows for a significant reduction in out-of-pocket expenses for a company. There are several other benefits to outsourcing, like increased organizational flexibility. It provides companies with the ability to respond rapidly to change by allowing them to increase or decrease their labor force based upon demand or production needs. Offshore outsourcing gives employers a larger pool of talent to choose from. It also allows for a reduction in human resource management and it frees up space in company buildings for other use. Repeatable and automated rule-based tasks are the most successfully outsourced jobs. Some of the jobs being outsourced are in information technology, call centers, medical services, legal services, customer service, advanced engineering design and architecture. People in favor argue that sending jobs to other countries stimulates trade and actually creates a stronger economy in the United States, and in the long run it creates more jobs. Once lower-skilled jobs leave the U.S., the higher valued jobs are left for the Americans to grab up.

Arguably the biggest disadvantage against offshore outsourcing is the loss of American jobs. It...
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