Offshore Outsourcing: What Makes it Advantageous

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Offshore outsourcing refers to the practice of contracting out a business process to an external third party organization that is located in another country. Besides cutting costs and maximizing profits – the main reasons why host firms resort to this business strategy, lack of individuals with the necessary skills is also cited as another essential factor. This second concern can easily be addressed by the chosen third party firm and at a much lower cost too. This is because cost of salary and operating costs in developing countries, considering currency conversion, is definitely so much lower compared to performing the same business functions in the host firm’s own country.

Based on the paragraph above, two factors are clearly necessary in offshore outsourcing: a host company from a developed country, such as the United States or Australia, and a third party organization from a developing country that has the capability to access and deliver digital data anywhere around the globe through the use of global electronic internet network.

The Philippines is one country where offshore outsourcing has particularly grown so fast. Some of the reasons why this is so include:

  • The government’s increasing support on IT investment and the availability of good telecommunication infrastructures that are reasonably priced;
  • High-quality locations at low cost;
  • Income-tax holiday offered by the government; and,
  • A large pool of graduates (up to 400,000 every year) with good English communication skills and knowledge in ICT as potential candidates for needed job vacancies (this means that outsourced projects will be handled by English speaking and highly-skilled individuals).

One example of an offshore outsourcing firm in the Philippines is Pinoy Partners Outsourcing Center Inc., which says that the many types of services an offshore third party firm can offer include:

  • 24/7 live chat support;
  • Customer relations management;
  • Creative processes;
  • HR solutions;
  • Software development;
  • Application maintenance;
  • Healthcare information management;
  • Medical transcription;
  • Medical billing;
  • Records retrieval/collection;
  • Data entry;
  • Data processing;
  • Research;
  • Legal services;
  • Content writing, copywriting and blogging.