Offshoring is appropriate for a business when the company can benefit from lower labor and production costs in developing countries. These cost savings can allow companies to offer customers cheaper products or services. The practice has also been credited for creating jobs and economic growth in developing countries. However, offshoring has also been criticized for hurting the economy by displacing American jobs.
Non-core business functions are often the primary areas of a business that get outsourced. They can include everything from human resources, information technology and manufacturing to customer support, accounting, payroll and security. Companies can often save money by offshoring these functions to third-party providers that specialize in those fields.
Another big reason for offshoring is that it allows a company to focus on its core business activities and develop a better product or service. A company can’t do that if it’s distracted by the hassles of managing other business processes and dealing with customers.
When it comes to manufacturing, the biggest advantage of offshoring is that it allows a business to reduce costs. Companies that can pass on these savings to their customers will make more money and stay competitive in the market.
Another big advantage is that it can provide access to talent that is unavailable or too expensive in the home country. This is particularly true for labor-intensive tasks, such as software development. Companies can take advantage of the expertise and low costs of workers in countries like India and the Philippines.