Offshore outsourcing involves hiring organizations or employees overseas for tasks such as customer service and data entry. It is divided into four categories: ITO, BPO, Software R&D, and KPO. Critics argue it takes jobs away from domestic employees and lowers quality, but proponents say it cuts costs and creates jobs. Experts suggest companies should tread cautiously and small businesses can use it to be more competitive.
Offshore outsourcing is the practice of hiring organizations or employees to perform business tasks overseas. For example, a company may manufacture and sell computer parts in the United States and still use offshore outsourcing to manage customer service and technical support phone lines. Data entry is another job that is often outsourced overseas. The Internet has played an important role in outsourcing to other countries, not only allowing companies to outsource work to other organizations and hire employees who are located some distance away, but also makes it easier to hire freelance workers from all over the world, bringing complete projects for significantly lower fees.
Offshore outsourcing is often broken down into four main categories. The ITO category involves the outsourcing of a company’s information technology abroad. The BPO category involves business process outsourcing, which can include call center management and claims processing. Software development falls under the Software R&D (research and development) category, while KPO covers knowledge process outsourcing, which typically includes processes that require a higher level of skill, experience, and/or knowledge. These things may include x-ray interpretation and investment research; they may also include accounting-related duties or even more technical jobs such as engineering.
Often, offshore outsourcing gets bad press when companies send work to other countries where they may pay lower wages than are typical for the country in which they are based. Opponents say outsourcing overseas takes jobs away from domestic employees and could even hurt the economy. However, this setup is not only criticized for wages. Some consumers also oppose this type of outsourcing, stating that it leads to a decrease in quality, especially when it comes to customer service and technical support. For example, there may be a language barrier that leaves customers less satisfied when dealing with a call center overseas.
Proponents of offshore outsourcing say such criticisms could be displaced. For example, while some critics argue that overseas outsourcing is responsible for significant levels of job losses, some proponents point to recessions, pain-spot fallout, and productivity growth as the real culprits. In fact, some critics argue that offshore outsourcing actually helps the economy in two ways. First, they claim it cuts costs for all members. Second, they claim it creates jobs by making the economy more efficient.
Right now, it seems like overseas outsourcing will only grow with time. Some experts predict that in a year, about a quarter of IT jobs will be overseas. However, many experts also suggest that companies tread slowly and cautiously to avoid talent loss and preserve performance. Additionally, some small businesses may find ways to use offshore outsourcing to make their businesses more competitive, especially in markets currently dominated by large corporations.
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