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Outsourcing simply means coming in agreement with another specialized group to do the work for your company. If we make it simpler, it’s like deciding for a food delivery for lunch instead of cooking it yourself for your family. Taking it to a wider context means companies in US, for example, outsources people outside from their company to attend to their customers’ feedbacks and problems like call centers answering our complains for the product we bought. With this, reduction of labor cost is the main benefit of outsourcing. The essence of the business and the product quality is maintained since it no longer focuses much on software that is needed for the business, a task being specialized by other groups. It means that for example, if a foodchain’s aim is to provide best breakfast experience to its clients, it will focus more on the food and the service they provide rather than the software needed to register payments and orders. They can outsource a company of software programmers with that expertise. Thus, being able to keep up with their business goal to their clients and gives the business a more competitive edge. Since outsourcing is time-bounded as stated in contract, the company does not concern itself with labor concerns such as termination of employees or behavior of people doing the job.
Offshoring, on the other hand, means getting people outside of the country to do the job for you. Nike, one of the biggest companies on sports apparel, hires people from Asia to make the shoes for them. Companies seek people overseas who proved to be doing the same job at a lesser labor cost making them reach their target sales given a period of time. It has the same benefits to outsourcing, only that, wages for offshore work are much lower.
Although similar in most context, outsourcing and offshoring are two different strategies. The failure of outsourcing is not being able to familiarize much expertise of the specialized group while offshoring fails when the company is unaware of the internal political or economical issues that might affect them. It is not necessary to outsource before offshoring though it is possible to offshore outsource.
The aim to reduce labor cost and increase production has then the trigger for these 2 strategies. The Philippines has been one of the most sought offshoring countries with its high literacy rate among the people and a very good foundation in the English language. Technology is used in its maximum potential to make sure that the strategy is very effective and beneficial for the company.
Offshoring has proved to more humanitarian and beneficial although, there are also issues brought up as business processes evolve constantly over time. “They took away our jobs!” is the most familiar cry since labor is now being offshored elsewhere. But to look at it at a more positive way, offshoring has recognized the skills of other countries. It has generated stable employment to countries whose main focus is not doing commerce against countries nor have the resources for that. And since the company has saved much on low wages, the savings are shared to the offshored workers themselves.
And the argument with these will probably go one for a while but not long though. The creation of opportunities made survival a little easier to few people or even merely possible to many. And even if companies becoming magnanimous and more people get regular jobs with this, the most benefitted of all are the clients who gets the best products or services for their hard earned money’s worth.