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What is offshore outsourcing?

Article image: What is offshore outsourcing?

Outsourcing, taking by itself, implies that some business processes of the company are shifted for execution to other companies. It is a mutually beneficial cooperation of two companies that allows one company to conduct all the activities at the full-scale level and another — to receive income for the provision of certain services.

Outsourcing is common for offshores too. The distinction of the offshore outsourcing from the usual one is that the performance of functions is entrusted to the company, which is located at a certain geographical distance: in another city, country or continent.

What are the benefits of offshore outsourcing?

Offshore outsourcing is the best option for company’s costs optimization. It is used by a large number of companies worldwide, including large corporations with multi-million revenues.

Firstly, offshore outsourcing is an opportunity to save corporate finances using different level of wages and lower tax rates. Also, it allows reducing production costs, because there is no need to maintain a permanent team.

Secondly, it is a rational solution to the matter of implementing non-core business processes. A vivid example is software development.

Thirdly, using outsourcing one can organize the execution of noncritical production tasks, which require unskilled labour.

Besides, outsourcing provides a possibility to enhance the quality of provided services using attracting foreign specialists.

All these benefits result in the revenue enhancement and development of the company.

Types of offshore outsourcing

Three types of offshore outsourcing are distinguished depending on the processes that are transferred for execution:

  • Software development;
  • Transfer of noncritical business processes performance of which requires large volume of unskilled labour;
  • Transfer of minor infrastructure supporting tasks.

Offshore outsourcing is quite often used for organizing call centres and providing technical support. Many companies from different parts of the world locate their technical support departments in India or Malaysia. For example, Qantas Airways Limited company (Australia) uses offshore outsourcing for maintaining its flying machines.

Conclusion

Offshore outsourcing is a rational choice of company management, which cares about spending optimisation and company's well-being. Benefits of outsourcing make it popular among representatives of small, medium and large businesses.

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