Who Really Benefit in Offshore Outsourcing?

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Most of us know what offshore outsourcing is. Offshore outsourcing is also called as a type of business process outsourcing (BPO), is the exporting of IT-related work from the United States and other developed countries to areas of the world where there is both political stability and lower labor costs or tax savings.

I recently read the article from McKinsey Institute, says that the savings enjoyed by companies that move labor-intensive service industry work from the United States to countries with lower labor costs have triggered an mass departure of US business-processing jobs.

Some analysts project that by 2015 roughly 3.3 million of them will have moved abroad. This prospect has prompted calls for the government to restrict offshoring. But they overlook the benefits that build up to the US economy from it.

This is a really mass destruction for the US economy because of this issue that they have been experiencing right now. This is also a good news for countries that really dominating in offshore outsourcing as well, especially India and Philippines.

A study by the McKinsey Global Institute details the wide positive economic benefits to the US economy from offshoring.

Beyond Offshoring

Companies that send their back-office jobs offshore often cut their labor costs by as much as half. But new research by the McKinsey Global Institute finds that these companies risk leaving billions of dollars in savings behind if they just replicate what they do at home in countries where labor is cheap.

The savviest operators redesign business processes to use automation and take full advantage of the new environment’s potential.

Transforming business processes as part of a strategy to offshore back-office functions can release huge new revenue opportunities even more valuable than the obvious labor cost savings that come with offshoring.