Offshore Outsourcing: Pros and Cons

Offshore Outsourcing is certainly one of the most cost effective forms of offshore business outsourcing. When a specific business of one country offers certain business projects or company services to another country then is termed as Offshore Outsourcing. This type of business process has become so popular among global business entities who have expanded their operations beyond their local boundaries. For example, in the case of manufacturing companies offshore outsourcing is very common. Now Indian small and medium enterprises (SMEs) are utilizing this strategy to expand their operations into foreign markets. This article is all about the advantages of offshore outsourcing and how it can be used by small-sized enterprises (SMEs) for enhancing their revenues.

What is Offshore Outsourcing?

One of the primary reasons behind the growth of Offshore Outsourcing industry is the fact that India is becoming an increasingly important market for global business functions. Besides, the government of the country is also supporting the growth of this industry through tax free incentives and support programs. Now the scenario has completely changed and the Indian market is providing a competitive advantage against other countries due to its proximity to the Chinese market. The reason behind this fact is that the government of the country has granted permission for setting up of offshore processing centre in India, and that’s why many businessmen are moving towards India for setting up their offshore outsourcing business functions. Also there is a relaxed set of standards and norms in the country, which have become a magnet for large international firms to set up their offshore operation centers in India offshore outsourcing.

Secondly the people who are involved in outsourcing activities to make sure that they get maximum benefit by using various online tools and techniques. This way they are able to save money, time and effort which are otherwise required when doing the same work within the premise of their office. In fact, by outsourcing the administrative work to offshore outsourcing companies India, the customer service representatives can concentrate on the core business function i.e. customer care. In this way they are able to maximize the productivity of the organization and reduce the cost involved in the process.

On the other hand it is very difficult to maintain the quality of output in the domestic scenario as compared to the offshore outsourcing performed by foreign companies. But here the opposite condition is also true, as the professionals belonging to those foreign countries are trained and experienced enough to produce quality output while paying less wages. It is because of all these reasons that both of these sets of professionals prefer to work on projects related to client-company relationship. The biggest advantage of such offshore outsourcing is that it helps to save money of the client company because the foreign countries like to provide good labor costs at a low salary. This way the client company is able to save money. Another major advantage is that the foreign countries also offer a comparatively lower cost of setting up the operations and also lower taxes and other indirect costs are also provided.

However, the Philippines is not only able to perform some offshore outsourcing works, but it is also considered as one of the fastest-growing economy of Asia. It is a rising star in the field of technology and manufacturing and the domestic market is also growing. The main reason for this growth is the rising demand of IT or Information Technology industry. Many companies in the Philippines and in other Asian countries are now offering offshore outsourcing services and many companies from the Philippines have already established strong international presence. A lot of organizations prefer to outsource their back office jobs to the Philippines because of its ability to satisfy the requirements and quality standards and also because the economy of the country has reached a high level.

There is a myth among many companies that they can save a lot of money through offshore outsourcing by hiring an in-house team. However this is not always the case because there are many disadvantages which are attached with in-house based service delivery. A company cannot be sure of its employee quality especially when he or she is not part of a formal training program and there is no standard system of development. Many people who work in the in-house teams usually do not have a clear vision of what the company’s core business is and how it can serve the customer best. These employees usually spend most of their time on non-core business and sometimes end up creating problems rather than solving them and this results in a loss of revenue.

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