Offshore outsourcing is a business strategy that is about cutting service development costs by shifting parts of in-house responsibilities, such as a company’s information technology, human recourses or finance and account departments, to an offshore service provider. This strategy might turn out to be a highly risky endeavor, in which service delivery does not meet the buyer’s expectations or hidden costs occur in the middle or the end of the development stage. In the past, such drawbacks led to the formation of a negative image on offshore outsourcing among many US and European buyers. A bad stereotype, however, might hinder many companies to make use of the numerous benefits that are potentially to obtain from outsourcing engagements.

This article looks on the bright side of offshore outsourcing and delivers more than one reason why this globally oriented business strategy is highly valuable, leading to competitive advantages and other benefits for the buyer company.

Through the eyes of outsourcing clients, the main reason of hiring an offshore service provider is to cut costs while receiving at least the same if not better quality services for their company. Cost-saving is the main reason for companies to allocate service production offshore. In this regard, it is important to maintain a high quality to low cost ratio in order to get maximum benefits from an engagement process. A second major reason for companies to outsource is to use the offshore provider’s high expertise while being able to focus on the own business’s core activities.

The main demand for outsourced services is in the area of IT outsourcing followed by HR and other types of BPO. Global sourcing opens up the opportunity for clients to use their offshore partner’s innovative infrastructure, human recourses with distinct knowledge and cutting-edge technologies. From a client perspective this might allow to attract business partners and contracts that are larger in scale and scope, thus highly profitable. Through access to business improving tools, the buyer might be able to gain significant competitive advantages, maximize his ROI and even enter economies of scale.

In sum, outsourcing partnerships should ideally create competitive business tools that accelerate the buying company on a global scale and lead to increased short and long term profits. Before engaging in outsourcing projects, buyers need to carefully scrutinize potential providers; only an economically healthy offshore partner can devote its entire concentration on high-quality service provision. One last aspect that is crucial for outsourcing engagement is to not focus on the price alone. AS with many other services and products, the cheapest is often not the best and good quality has its price.

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