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Part 2: Why Keep Jobs Here When You Can Outsource to Foreign Countries?

Aug 17, 2007
Many companies today choose to contract out some parts of their business to companies located in a foreign country. This practice is called offshore outsourcing. If a company is trying to expand without major increases in overhead, or if the company just wants to reduce overhead, this can be an ideal solution.

Outsourcing makes sense. A developing nation, India for example, has the human resources to serve a growing industry, but may not have the capital to build firms and the related infrastructures. These offshore nations can offer labor at a fraction of the cost of domestic labor, and they will usually have tax incentives for outsourcing companies to encourage this kind of business. This translates to huge savings for the company that has work to export.

Businesses also see a unique advantage in that once the business process is outsourced, whether it be sales, telemarketing, research, etc., the outsourcing company no longer has any of the headaches. The offshore company manages all of the aspects of finding, hiring and supervising the proper professionals for the job. This is a win-win situation for both parties.

If a company is considering expanding to another country, outsourcing is the ideal way to make an entree into that country. The company can get to know the culture and market of the country and be well poised for success in that country when the time comes. Many companies have used outsourcing to get a feel for a new market and then used the information gathered to help them in their expansion plans.

There are, of course, risks to outsourcing as there is to almost any business practice. One of the most notable risks is the exposure of sensitive information to a foreign country. A company may not want their organizational secrets or new strategies to go to an outsourcing firm who may also be working for their competitors. The country in which the outsourcing company is located may also have different laws that may require the some changes in policy on the part of the company. OUtsourcing is also cited as creating a distance between the company and its employees. A company's image and reputation may suffer as a result.

Most companies, however, if they have done their homework and recognized the risks and downsides to outsourcing and prepared for them properly, will benefit greatly form outsourcing. In addition, they will benefit the economy of the developing country.
About the Author
MJ Batta writes job outsourcing related topics and hosts a job outsourcing research site at Outsourcing Research and a special outsourcing report at Outsourcing Jobs
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