Pros and Cons of Outsourcing & Offshoring

While it may sound simple in principle, the barriers to outsourcing and offshoring can be significant. To begin with, it is politically sensitive. Political candidates sometimes state that companies that practice offshoring are all but evil, under the theory that they are depriving local workers of jobs. Consequently, U.S. and European corporations that use offshored services providers often prefer to keep it quiet. In addition, both offshoring and outsourcing create challenges for corporate management, which may include loss of control, quality issues, lack of flexibility and customer or labor backlash. It is not uncommon for companies to be quite disappointed by their initial efforts to outsource their needs to offshore firms.

It’s easy to see that the offshoring boom has been beneficial to major outsourced services and contract manufacturing centers such as India and China. In these two nations alone, tens of millions of jobs have been created, and both GDP and the middle class have been growing at enviable rates. However, looking at offshoring from the point of view of the nations where client companies are based, including the U.S., Canada, much of Western Europe and Japan, is a more complex matter that often provokes emotional responses.

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