Outsourcing or offshoring refers to the practice of accessing external products and services to perform business functions in a country other than the one country where products or services are developed or manufactured. Outsourcing offshoring practices have made it possible to generate many white-collar jobs especially in the sector of information technology. It is a good trend of sending expertise work overseas. The outsourcing can reduce the higher wages in the domestic country. The outsourcing of the information technology (computer programming, data processing and technical support) is creating many customer jobs in the developed countries like United States and the United Kingdom.
Offshoring is also defined as the movement of business process performed in one country to the same service in another country. A company moving an internal business unit from one country to another is called offshoring or physical restructuring. On the other hand, outsourcing refers to the movement of internal business process to an external company.
In the recent years, outsourcing in the area of information technology has generated thousands of jobs in the countries like India, China, Brazil and the Philippines. The offshore outsourcing is a next step of outsourcing. It is best described from large corporations to small IT companies. The developing countries are offering outsourcing business to the developed countries boosted by certain factors like manpower, infrastructure facilities, knowledge, cost saving, legal and business environments. This practice can successfully save the expenditure on staff, equipment, training and maintenance. However, many people assume it as a mean of jobs going overseas.
The offshore software outsourcing is a fast growing area that can maximize the return on investment and remains competitive. It needs proper synchronization between onshore and offshore teams. A better coordination can enhance the benefit of outsourcing and offshoring software companies. Information technology outsourcing (ITO) is used in reference to Business Process Outsourcing or BPO. The Indian outsourcing service providers in the IT are helping many American technology companies.
The development in communication infrastructure and telecommunication (internet expansion) is largely responsible for the growth in IT service offshoring. Many services are coupled with digitization that made it possible to shift the actual production location of services to low cost countries in a transparent manner. India's offshoring business took root in low-end IT functions in the early 1990s. Since then it has moved to back-office processes such as call centers and transaction processing.
Outsourcing and offshoring have become tantamount to India and other fast developing countries as their IT personnel and services are standing in line with their counterparts. Therefore, many IT companies across the world outsource services in IT, web designing and development requirements to India and other providers. Outsourcing and offshoring of search engine optimization service costs lower as compared to its production in the developed country itself. Its negative impact is almost negligible on offshore vendor's services. Many offshore and leased staff specialists have started out as IT providers, so there is less business risks if you work in support with the a reliable offshoring system.