Is offshore Outsourcing a Viable Business Strategy for Companies?

Is offshore outsourcing a viable business strategy for companies?        

Have anyone ever wondered, what are the business strategy that are being applied in those big companies nowadays? Have anyone ever heard of this strategy called “offshore outsourcing”?  Offshore outsourcing is the practice of which one company providing services for another company by hiring an external organization to perform some business functions in other country. Sending work overseas with higher wages will reduces their own domestic employment and investment. The strategy of offshore outsourcing is a very powerful tool which helps the development of a company.

One of the main reasons why offshore outsourcing is an advantage for companies is that it saves a lot of money. If a business is undertaking offshore outsourcing locally or internationally, the job can be done at a minimum cost compared to if it is done in-house. For example, information technology (IT) is one of the areas that offshore outsourcing is mostly included. To run an IT department in a company is very costly. It is also time consuming for a firm to set up their own IT department especially when the company lacks resources and workers who can run the IT department. Besides, offshore outsourcing is able to minimize the start-up time and lower the costs of entering a new market. Moreover, outsourced IT Company is more professional in using which type of technology in order to match with a particular business and able to catch up with the latest information. In short, by letting those specializations to perform the job, it will be more effective and efficient to accomplish the task in time and most of all it saves costs.

Another strong argument why companies should apply offshore outsourcing is that it is able to expand its capabilities. Some companies prefer to undergo outsourcing because they do not have the skills and equipment to produce good product and services. In this case, the United States is facing the problem of lack in skilled workers. Therefore, offshore outsourcing is an option for them to fill in the job with competent employees. For example, India is collaborating with the United States (US) by supplying highly skilled workers. By doing this, the high quality of production for the products and services can be maintained and is easier to get the products into the market sooner. Hence obviously, offshore outsourcing will become a competitive advantage for the company to grab business opportunities.