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Offshore Outsourcing Services – What is Offshore Outsourcing?

When a company hires another company or employees to perform some of its functions overseas, this is known as offshore outsourcing. For instance, a computer manufacturing company in United States may use overseas workers to handle customer help desk and technical support phone lines. Offshore outsourcing services have grown popular over the recent past years. In fact, offshoring has become a sort of organizational norm. The major driving force behind hiring overseas workers is cost saving. However, diverse benefits have followed suit. 

There are different types of business functions outsourced overseas, virtually all business functions. Data entry is one of those massively offshored business functions. The internet is the key player in linking overseas workers and their international clients. Also, the collection and delivery of offshore services has been made so easy, faster and more efficient - thanks to the internet. 

Offshore Outsourcing Services – Classifications

Offshore outsourcing services are classified into 4 major areas;

1. The ITO (Information Technology Outsourcing); ITO is a popular trend in today’s business environment, with Philippines and India playing key role. It is cost effective to outsource a company’s information technology functions. The best part is access to world-class IT experts, which would have been cost-intensive when contracted in-house or in-country. 

2. The BPO (Business Process Outsourcing); business process outsourcing is also a common trend among companies and businesses. BPO includes claims processing and call center management. Cost-saving, access to professional services and other benefits are the propelling forces behind business process outsourcing.

3. The R&D (Research and Development); the R&D category is basically concerned with software development. There are tons of offshore specialists in this area. Fortunately, it costs only a token to contract these experts, compared to hiring an in-country R&D expert.

4. KPO (Knowledge Process Outsourcing); this covers business processes requiring higher skill level, knowledge or experience.  Typical examples include researching investments, X-Rays interpretation and more. Knowledge processing offshore outsourcing services may also include more technical tasks such as engineering. 

The task performance flexibility and general favorable outcomes that come from offshoring makes it an appealing business strategy. A lot of companies today have survived by taking advantage of offshore business functions performance. Also, global audience generation, wider market and increased fame are the global appeals that come from offshore outsourcing.

With the look of things, offshore outsourcing services will continue to thrive. Offshoring is here to stay, it appears so. As long as companies continue to gain massive labor cost savings and competitive advantage, they may not stop leveraging offshore services for most of their business functions. However, a company should exercise caution and thoroughness when selecting an offshore vendor, this would help to foster desirable outcome. 

Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting


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