Frequently Asked Questions on Offshore Outsourcing (Part 1)

Filed in archive Basics on January 28, 2005

Here are some answers to your questions about offshore outsourcing.

1. Why is work going offshore?
Work is migrating offshore because of the following reasons. New technologies (Internet, voice over IP, enterprise applications) make it easier to manage labor in the global economy. Also, competition and cost management push companies to go offshore when their competitors do so. Lastly, the global economic downturn makes companies focus on increased return on their IT investments.

2. Which industry is leading the offshoring wave?
Financials services firms -- retail banking, investment banks, and insurance -- are the leading offshore outsourcers. GE Capital, American Express and Citigroup are the leading companies involved in outsourcing. IT financial services jobs are increasingly being offshored as well.

Business process outsourcing involves low-level clerical jobs, call-center jobs, and back-office transactions processing. More complicated jobs such as analysis and financial modeling are selectively being offshored, but most high-level managerial jobs stay in the United States.

3. Where is the offshore work going?
The top five offshore outsourcing countries are India, the Philippines, Canada, Ireland, and Russia. Of these countries, Canada and Ireland have the highest average salaries, while the rest are lower-cost alternatives.

Offshore leaders also include China, Mexico and South Africa. The challengers are Brazil, the Caribbean region, Eastern Europe, Malaysia, Israel, Singapore, and Vietnam. Next in line to the challengers are Northern Ireland, Bangladesh, Ghana, Korea, Malaysia, Mauritius, Nepal, Senegal, Sri Lanka, Taiwan, and Thailand.

More FAQs in the days to come.