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Offshore outsourcing:

Outsourcing refers to the hiring of an external organization (subcontractor) to perform most or all the business functions at a lesser cost in a foreign country other than the one where the product will be sold or consumed, whereas offshoring is whereby the functions are performed by a foreign division or subsidiary of the parent company at a cheaper cost. Therefore offshore outsourcing refers to outsourcing to firms in foreign countries, with the aim of taking advantage of cheap labor found there. In the past several years, outsourcing contracts have increasingly been given to firms in developing countries e.g. India and China. For offshore outsourcing to be economically viable, the savings realized must exceed the increased costs of management and risks associated with offshore outsourcing.

Myths and Realities

There are several myths and realities associated with offshore outsourcing. The following are some of the most common ones;

Myth: A job outsourced is as good as a job lost.