Home Services Outsourcing Offsourcing and Outsourcing, Offsourced Jobs, Offshoring, Offshoring and Offsourcing Benefits and Advantages

Offsourcing and Outsourcing, Offsourced Jobs, Offshoring, Offshoring and Offsourcing Benefits and Advantages

What is Offsourcing or Offshoring?

Offsourcing or Offshoring

Offsourcing or Offshoring refers to outsourcing both goods and services i.e. materials and manpower to another country i.e. offshored. Offsourcing or Offshoring is a relatively new term as compared to outsourcing, which may be domestic or international. Thus Outsourcing is a larger field encompassing the sub-field of Offsourcing or Offshoring.

Offsourcing may involve Offshoring just the non-core processes or tasks to a service provider in another country, say India, or also Offshoring certain jobs or both. Offsourcing may also involve transfer of certain employees to the payroll of the service provider. This not only saves time and costs but also enables better communication and coordination between the client and the service provider.

Certain Benefits of Offsourced Jobs include:

  • Customers need not be served directly i.e. face-to-face. The offshore outsourcing company takes care of the customer support. Many outsourcing companies exclusively specialise in customer support.
  • Offsourcing enables information rich content through KPO (Knowledge Process Outsourcing) and it is a known fact that content, backed by high information is also easily accepted by customers and clients alike.
  • Offshoring reduces costs drastically due to high wage differentials between the countries of the client and the service provider. Also there are significant savings to be made on overheads like medical allowances, HRA etc.
  • Offsourcing is greatly useful to companies operating on a limited budget and schedule as it enables quick set-up and faster delivery possible. Offsourcing also introduces flexibility in operations with options to shift, enhance, curtail or fold up operations, offices just as quickly.
  • Offshore outsourcing enables continuous development cycle whereby work can be carried out 24 hours a day when divided between employees working from two different countries with complimentary time zones, example US and India. When one team sleeps the other works.
  • Offshore outsourcing also greatly reduces risks for a company by transferring the risk burden to the vendor rather than its own IT department. This enables the company to focus more on its core expertise, say Hotels, while the service provider looks after other non-core domains like data backup and so on.

Among the various Offsourcing segments IT Offshoring comprises 28%, followed by HR Offsourcing at 16%, Sales and Marketing (15%), Finance (11%) and Administrative (9%) while other types comprise the rest. No wonder then 40% of the Fortune-500 companies including Microsoft, GE, Motorola and many more, have already leveraged the Offsourcing model to their benefit.

Is Offsourcing or Offshoring here to stay?

Well the facts..or rather the companies speak for themselves. US IT major Accenture announced in 2006 that it would be doubling its employee headcount in India to 10,000 taking advantage of the lower wages prevalent among the Indian software engineers, and with the same skill level as found in the US. IT offshore sourcing came in two ways. The first was related to Hardware outsourcing whereby IT product manufactures started Offsourcing component manufacturing like chips, batteries to other countries like China and in the second wave Software offsourcing followed, which included software support, application development, testing et al

According to a study Offsourcing or offshoring can result in average 50% savings on employee salaries with overall savings up to 30% when jobs are offsourced to countries like India, Philippines, Malaysia, China etc. These are considerable savings especially in recessionary times when companies all over are looking to cut back on costs and boost their bottomlines. Thus offsourcing will continue to be focal to the plans of many enterprises for a long time to come.

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