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Pros And Negative aspects Of Offshore Outsourcing Business Essay

In the new time just offshore outsourcing has emerged as an essential and extensively designed business strategy. Organisations throughout the world consider outsourcing as a pathway to avail benefits of cost and effective sources of the country to which work is outsourced. Many company s in european markets offshore outsource their activities extensively to growing market countries where there are location, cost and reference advantages to gain a competitive advantage in the global market.

The distinctive feature of just offshore outsourcing is to provide continuous service in order to meet the different time zones and gain customer satisfaction.

"Off shoring refers to the relocation of outsourced activities across countries. Along the way of outsourcing, at first a particular activity is generalized across firms, then the transfer of the positioning of owner can cause off shoring. " Chandrasekhar & Ghosh, 2006, p. 92

The major reason for any organisation to offshore outsource their activities is to get expanded benefits and increase net profits. Additionally it is adapted to achieve various cost, product, and differentiation advantages. It really is an acknowledged fact that companies outsource various activities depending upon the country where it is proficient at and this originates from the educational system and requirements accompanied by that country. India, for example is most preferred destinations for the service and IT industries due to advantages like cheap labour, effective skills, dialect regularity and courtesy. Outsourcing is successful and effective cost keeping strategy when applied in a legitimate way. For just about any buy decision, taken by the companies in western world the most attractive solution is always to offshore outsource to spots throughout the world.



The major advantages of western companies by just offshore outsourcing their activities would be tax benefits, cheap labour and increased productivity. It enables the firm to lessen source cost by relocating creation to countries where inputs and labour costs are lower. Thomson, the French consumer electronics group, transferred the development of a few of its training video cassette models from Germany to Singapore to have the benefit of the latter's lower cost base.

Outsourcing services to India is consistently rising because of its various advantages like advanced technology, cheap proficient labour, infrastructure and other facilities. American companies will improve their brand by client satisfaction and substantial gains by offshore outsourcing. Microsoft, software large in USA just offshore outsource their customer support and tech support team activities to spots such as India without any language barriers, good quality infrastructure, stable government policies, supporting labour laws and regulations and other favourable factors.

The market for home country products is long; for example: IT firms in India doing work for US companies will buy US computers and related equipment. 40% of the bundle of money 500 companies are firmly interested in the software outsourcing model because the average cost savings by implementing this is in the number of 40% to 70%.

The companies can get away from from various regulations and constraints imposed by the house country and therefore reduce production costs by outsourcing production channels. It really is adapted by most the car production companies.

Ford Motors, USA based car making company has shifted 70% with their production models to Mexico due to stringent environmental and emission laws imposed by USA. Free trade across EU in addition has favoured many motor companies to change their production devices to Eastern European countries to exploit cheap labour and resources.


The direct romance between employees and companies are lost credited to distance and communication distance. Risk in moving technology and know-how, this can be copied by its market competition in the coordinator country. The company encounters a potential menace from the employees and competitors as their specialized information can be leaked anywhere and spreads such as a rapid fire. It has a direct impact on the company's brand name and sales.

Dell for example, is basically a US established company but its activities such as processing, customer and tech support team are outsourced on a worldwide scale. Many competition took good thing about unmotivated employees, gained access to complex information and made similar kind of products with same features and services. The identical is the case with Chinese organizations. It is a view to find any duplicate of consumer goods of traditional western brands showing to be exactly same for 80% cheaper price in the Shanghai local "black market".

Offshore outsourcing carries the chance of lower quality products and lower benchmarks because of lack of training and effective settings by home company.



People always look forwards for something new every day! Appearing market companies can develop and create new brand name by fulfilling this similar need of flock across different markets on the globe. For instance, Hyundai motor company is along the way of growing into brand appreciation by its customer as it is determined to attain the goal of earning better quality product. In addition, it develops its image as a high global car company by managing every process transparency from the perspective of business ethics.

Foreign immediate investment plays an important role by concentrating on growing economies than developed economies. By upsurge in inflow of FDI by the global company into growing market the income and sales boosts thus increase in standard of living. By establishment of Microsoft, IBM and Oracle in metropolitan cities of India, it offers enormously resulted in increase in income and spending capacity of individuals.

Technology and skills are moved from western companies to the emerging market. This creates waves and builds up competitive heart in emerging companies thus increased productivity by the appearing market companies is achieved.


Small and medium companies in appearing markets have problems with low revenues and profit margins by occurrence of highly competitive brands. By establishment of several clothing american brands in India, several yarn farmers to the material retailers in the source chain have shut their entry doors for business.

It is detected that some companies which surfaced has not succeeded due to insufficient co-ordination and good romance with their company.



Workforce in western countries builds group and individual learning ways to promote self consciousness and professional development. Employees are trained with Top notch design and delivery designs and lastly of their experience these are better in learning involvement.

Employees are motivated by giving benefits and incentives for an improved performance of the business. McDonalds, for example provides potential advantages to its employees and so keeps its employees to are better for further benefits.

Highly talented and multi skilled employees receive more benefits like increase in salary and bonus center. The first preference is directed at employees who work inside the home other than outside the country. The companies who initially committed to fringe countries of south-east Asia such as Taiwan, Thailand, Singapore and Malaysia are now investing in China due to their highly specialized and knowledge skilled labour.


Decline in procedure and creation process in home country, which brings about loss of jobs and thus create unemployment in one's own country.

Inefficiency shown in the progress of work and insufficient knowledge for which employees expect training for each and every activity, thus increases the expenses. Dell pcs went back its business help desk from India to THE UNITED STATES because of a rise in problems from its customers about Indian employees as these were lacking in solving sophisticated computer problems.

The labor force of traditional western companies' faces a hardcore competition on a global scale. They may be less encouraged because of job insecurity and pay slices.



Employees need to work in such appearing companies as their payrolls will be high when compared to local companies. These are large companies where employees professional life develop faster with attractive salary offer.

If one would like to visit the globe and have the capabilities to talk to different kind of people they have got an opportunity to work in such field and thus changes their lifestyle. TESCO, for example a U. K. founded company which outsources all its payroll, service and offer chain control procedures to India. Employees who work offshore for this company are given an chance to switch their careers if advertised to a higher level and get a chance to work in U. K. That is regarded as a dream become a reality for just about any typical middle class Indian employee. It generates motivation and elevates the spirits of workforce, hence job satisfaction is achieved.


Expatriate assignments can be quite expensive, maintenance cost of expatriates in a host country range between three to ten times the cost of local employees with similar duties.

Sometimes employees aren't motivated properly which results in failing to achieve the assignment goals and thus reported at troubling levels. Employees are made to work overtime and not paid properly.

The employees of the european market dependant companies are significantly affected when there is any financial crisis or overall economy imbalance for the reason that country.

For example, Indian software employees are straight strike by the recession in america or UK. If there is no business for the organization the dependant workforces in the outsourced countries suffer from losing out their jobs.

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