Offshore outsourcing

Revolution in business envoirnment

Table of contents
Introduction
Legal issues
Business issue
Offshore outsourcing in India
Video resources
Resources
Feedback

Introduction

Offshore literal mean who is not on your shore or beyond shore and Outsourcing is the business activity rocking the economic environment globally. Offshore outsourcing has changed the conducting way business. In the concept of Offshore outsourcing the buyer of the service is located in foreign country then the provider of the service.

No organization can perform all of its activities optimally and with same efficiency as others. So to reduce or eliminate its non-core areas of functioning, and to gain business advantage, organization uses outsourcing. Each activity in business consume some resources and the activity consume more resources will effect the overall profitability. Business firm will find some high consumption activities when compared to its resource consumption. The firm contracts with another entity that is better at performing that particular activity that provide service for business firm.

Many developing countries are providing quality services at economically cheap price in comparison to developed countries and attracting the business organizations.

Opponents point out that the practice of Offshore outsourcing by countries with higher wages is potential threat to the domestic job market and domestic investment in the developed world. Jobs in some sectors like information technology are potentially affected in countries such as the United States and the United Kingdom.

Offshore outsourcing demands extreme caution, the process starts from client’s need recognition and ends with the end of contract. The clients are at a lesser advantageous position than to whom they outsource their business process.

Legal issues

There are many legal and business issues in their offshore outsourcing business for both client and the service provider to face at present.

Heterogeneous environment that does not consider geographical boundaries, raises a major legal issue. The rules for governance and justice change when geographic boundaries change. In any offshore contract at least two different legal systems are involved. It can generate ambiguities and confusion in the perception of both entities. Some counties taking this issue seriously but still there is no standardized legal rules and regulation.

Another legal issue is related to dispute settlement. Which legal system should apply to settle the dispute? Which legal provision should the entities follow during the execution of the contract?All the offshore contracts should specifically highlight the system of dispute settlement.

Taxation policy has great effect on Offshore outsourcing . Both the entities should look what tax implication they will have to face because different countries have different tax laws.This influences the offshore outsourcing and act as a deterrent in effective relationship of concerned parties.

Business issue

Offshore outsourcing suffers from many business issues and influenced by international factors. We will discuss here some Business issues which a client should consider before deciding upon the service provider.

Increase in dependence of an organization on others.Business result dependent on how offshore partner works. The buyer becomes vulnerable to business threats from offshore outsourcing, he will not outsource until he finds an advantage in business activity.

Offshore outsourcing is a relationship between two business organization that have cultural difference and have different set of ideology. Counter policies between both countries can create deadlock and business tie-ups.

Another business issue is Human resource. Due to the practice of Offshore outsourcing the problem of unemployment arises. This problem pressurize governments to stop outsourcing and this can be a great business risk for both the Client and the Service provider.

Offshore outsourcing in India

India's capability in offshore outsourcing makes it stand one amongst many. India has achieved a unique position in the Information Technology sector. IT sectors such as business process outsourcing, call centers and other outsourcing sectors like IT consulting is now accepted globally as India offer cost effective solution.