OffShore Outsourcing ……. This term is now widely known in the business world. However, there would be still clarification in your mind on what is it and why other business is using their services.
Or maybe just wondering how it all start for this industry.
So What is OffShore Outsourcing?
First let’s try to get to know the meaning of offshore outsourcing.
If you look at Wikipedia, it says Offshore outsourcing is the practice of hiring an external organization to perform some business functions “Outsourcing” in a country other than the one where the products or services are actually developed or manufactured “Offshore“.
Offshore outsourcing is the practice of hiring an external organization to perform some business functions “Outsourcing” in a country other than the one where the products or services are actually developed or manufactured “Offshore“.
This can also be called as BPO (business process outsourcing).
You are probably wondering this by now…
When and How did the offshore outsourcing start?
Well there are a lot of speculations on when it all started for this industry. I will just give two citations on when and how it started for the outsourcing company.
One of them was cited by Outsourcing Partners, Outsourcing can technically be said to have started in the early 1980s with European airlines setting up back-office operations in the Indian Capital of New Delhi. In the second half of the 1980s, American Express consolidated its JAPAC (Japan and Asia Pacific) back office operations into New Delhi. In the 1990s Jack Welch set up GECIS (GE Capital International Services) with call center operations in India.
On Diffen, The term entered the business lexicon in the 1980s. In the second half of the 20th century, as companies tended to grow larger and skills were required to be more and more specialized, companies found that external providers were often able to get work done faster and more efficiently owing to skills they possessed. This led to more hiring of external providers to manage business functions and projects where specialized skills were required.
Towards the end of the twentieth century, with improvements in shipping technology and telecommunications infrastructure, it became increasingly efficient to get work done in other geographical locations, especially in developing countries where wages are lower. This practice came to be known as offshoring. Captive offshore refers to multinational corporations (MNCs) establishing subsidiaries in several countries and getting different types of work done in different countries. Factors that MNCs consider when offshoring include costs of factors of production (wages, raw material, transportation costs, utilities such as electricity), taxes (many countries offer subsidies to entice MNCs to set up shop) and skills available among the work force.
Nowadays, big companies also do put some parts of their business offshore. This is because they see it more cost efficient wise for the company.
What kind of service do offshore outsourcing offers?
You might ask yourself what kind of work can offshore outsourcing companies do.
and answer is… EVERYTHING!
Believe it or not yes they can pretty much do everything you want or need for your business.
We can list some of the services you can get from offshore outsourcing companies (as quoted in Outsourcing Partners):
- Software Outsourcing: website designing, content management system, dashboard creation and etc.
- Health Care Services: accounts receivable, EMR, software, medical bills processing and etc.
- Financial Services: bookkeeping, accounting, analysis and etc.
- Engineering: mechanical, civil, architectural and etc
- Customer Service Support: inbound/outbound call handling, help desk, chat or email support and etc.
These services stated above is not all what outsourcing companies can offer. I’m 100% sure that one offshore company is doing the task you need!
What is the difference between in-house offshore vs offshore outsourcing?
Yes, there is also what you call in-house offshore outsourcing which differs greatly from standard offshore outsourcing, so try not to mix them up! Read below to understand the differences between them.
In-house offshore. As mentioned earlier, sometimes big companies take part of their businesses offshore. In many cases, companies are simply putting their subsidiaries outside of the country they are originally operating in – this is in-house offshore outsourcing. They will normally take it to a country where they can cut the costs of operation or penetrate a foreign market.
Offshore outsourcing. This is when you hire another company that is located outside the country that you are operating in, to perform the business operations for you. As stated in Business Dictionary, work performed for a company by people in another country is typically done at a much cheaper cost. Outside of costs, offshore outsourcing may be used to complete tasks that the company may not be equipped to handle in-house.
Now ALL is CLEAR.
If you’re in the early startup stage, then you might want to consider outsourcing some services.
Simply because it’s cost-efficient and you can get a team that has the skills for your particular needs.
Are you thinking of outsourcing software development?
First let’s talk.
I know you have a lot of question you may want to ask to an expert.
Feel free to drop an email taiki [at] d8ii [dot] com.