Offshore outsourcing refers to hiring other organization from other country to execute business processes. This can customer service, data entry and processing, technical support, computer programming, transcription, accounting, animation, graphic design and much more included. In principle, any business process that can be performed by telecommuting can be outsourced to external organizations.
Offshore outsourcing can be divided into four various types: ITO outsourcing 'ITO', business process outsourcing 'BPO', offshore program development and knowledge process outsourcing 'KPO'. BPO is maybe the most well-known kind of outsourcing due to call centers. Thousands of call centers have mushroomed in developing countries such as India and Philippines to supply support to enterprises in developed countries such as Europe and United Kingdom. While most call centers are known to supply customer support across assist desk, email, phone, and chat, they also supply data entry services, insurance claims processing, and telemarketing functions.Containing lower operating costs
From a businessman's point of view, outsourcing brings numerous benefits, containing lower operating costs and ability to increase profits. Offshore outsourcing also allows organizations to focus on their core competencies and on innovating products and services. In addition, outsourcing human resources gives organizations access to knowledge, talent and expertise that is not available locally.
In an article published in a July 2009 issue of Businessweek, India remains the top outsourcing destination in world. The Philippines, with its booming call center industry, came in second. These two outsourcing destinations account for 50% percent of total global BPO market. Another popular outsourcing destinations mentioned in report contain Thailand, Malaysia, Egypt, Jordan and Vietnam. The countries of UAE, Tunisia and Morocco are also quick becoming havens of BPO organizations due to cheap labor and lax business laws.Outsourcing of back office business processes
Due to popularity of offshore outsourcing, it has become one of most controversial topics in economic community. On the one hand, outsourcing back office business processes and information technology 'IT' functions yields major savings for an organization, regardless of size. An organization on brink of bankruptcy can really be revived by outsourcing some of its processes to countries like India, the Philippines and China, where labor is cheap. From an economic point of view, this is good for economy, as an organization in difficulty is still better than a dead company. A struggling organization puts food on its employees' tables and prevents them from joining the unemployed.
On the another hand, offshore outsourcing usually leads to massive layoffs and job losses, which, as any economist will tell you, is bad for economy. Except the increase in unemployment rate, the government treasury will be seriously impacted as it will have to pay unemployment benefits to unemployed while tax collection is reduced. This has prompted several political groups in Europe to lobby for laws looking for to curb outsourcing abroad. One of those laws, introduced and passed in 2004, prohibits federal government contractors from subcontracting work to outside suppliers abroad.