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The Rise of Offshore Development Outsourcing Services

Aug 30, 2008
The landscape of the global working environment is certainly undergoing a major overhaul. Giant corporate firms are truly disregarding the setback of the geographical limitations. Thus, you would find one company having simultaneous operations in its home base and in other countries. Offshore development outsourcing services have become the current revenue driver in major global firms.

What are offshore development outsourcing services? Years ago, companies have not conceived the idea that some of their business processes would have to be outsourced abroad. Now, almost all major global firms are jumping on the bandwagon to establish their own business process outsourcing elsewhere. Thus, there are many offshore development outsourcing services abounding especially in countries where costs are low.

Offshore development outsourcing services are referring to the process of outsourcing a company's certain business tasks, like human resource, payroll and customer services, to a third-party and accredited outsourcing service provider. Thus, when major US companies enter offshore development outsourcing services deals, they would contract a third party to set up operations in another country, like India, Sri Lanka and the Philippines, where a specific business process of that company would be conducted in that other country.

Corporate savings

The main reason why big companies resort to entering offshore development outsourcing services deals is generation of hefty corporate savings. It is a well-known fact that currently, operations costs are really bulging. The global economy is experiencing a major crunch.

That is why to widen margins despite the prevailing business environment; companies are aiming to reduce operations costs. That way, profitability is maintained without sacrificing quality and efficiency. Offshore development outsourcing services transactions does exactly that. Offshore development outsourcing services activities help curtail rising business costs by generating savings from hefty wages that could have been paid to workers at the home base.

For example, a company is based in the US, where minimum salary packages are huge. That company would then secure an offshore development outsourcing services agreement with a business process outsourcing provider in a third-world country, like the Philippines. Under the offshore development outsourcing services deal, the accounting operations, for instance, of the company would be transferred to the third-party business process outsourcing provider.

Huge savings would be generated from reduced budget to compensate employees. An average outsourcing employee in the Philippines is paid just about $7 per day, which is up to five times lower when compared to the pay package for US-based employees. When taken collectively, the operations would help the company book savings by spending less on operations. It is that way that offshore development outsourcing services contracts proliferate.

Offshore development outsourcing services transactions

Offshore development outsourcing services could further be sub-divided into two big categories. Offshore development outsourcing services deals could be in the form back office outsourcing, where operations like purchasing and billing are transferred to the business process outsourcing. Front office outsourcing is that form of offshore development outsourcing services where marketing, technical support and other customer-linked tasks are entrusted to the third party business process outsourcing firm.

The offshore development outsourcing services providers recognize the need to synchronize their operations to those of the client-company. Thus, many business process outsourcing units in the Philippines, India and elsewhere, are operating at graveyard shifts to synchronize operations with the US time.

Government support

Governments of countries where offshore development outsourcing services providers are based are extending full support to the growing business process outsourcing industry. The support system come in the form of tax breaks, reinforced security, subsidies and many others. The governments recognize that continuing operations of business process outsourcing firms would translate to jobs and added revenues to the country and to the jobless citizens.

There is really no stopping this ever-growing industry. Every party involved is really benefiting. From the client-company, which generates operations savings, to the offshore development outsourcing services provider, which generates revenue, there is no doubt that potentials for profit are at stake.
About the Author
Sarfaraz Khan is the best author in the industry also provides services to digitalxstream that is perfect source for complete ecommerce business solutions including e-commerce design solutions. Expert in provide offshore development outsourcing services, ecommerce design and VOD solutions
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