The Outsourcing Industry: Offshore Business Coming Home?

Outsourcing is commonplace in today's business world. The term is used to refer to subcontracting a certain process, be that a design procedure, operating a call centre, or manufacturing, to a third party. It's a decision that can be made for a number of reasons; firstly to lower costs through increased efficiencies and sometimes by utilising lower labour costs; to improve the quality of a procedure or service, or to utilise a skill or knowledge which is not possessed in house. Outsourcing can also accelerate the development or production of a product, and even time zones can play a part in outsourcing decisions, as they can make a service available 24 hours a day.

Outsourcing began in earnest during the 1980s and it is an industry which has grown, especially alongside the development of countries like Russia, India, China and Brazil, as their skill sets have grown, and these countries have been able to provide a source of cheaper labour to many companies in the developed world.

Offshore outsourcing has been particularly popular with large multinational companies, who have been able to make considerable savings by outsourcing entire units of their business - most famously manufacturing, but more recently call centres and software divisions.

The outsourcing industry has grown so big that there are now many companies who specialise in business process outsourcing, offering tailor-made services that allow companies to focus on their core business whilst their print, information, custom management, logistics or financial service needs are taken care of; and companies outsourcing UK business divisions to third parties in the UK or abroad are increasingly turning to these outsourcing experts.

It was a mass of big British financial companies that led the charge to outsource offshore, but some are now rethinking their move and are bringing certain elements of business, such as call centres, back the UK, whilst taking internal services such as accounting and billing offshore.

The moves comes in light of some consumer groups who have questioned the quality of service offered by non-UK facilities, as well as the disputed economic benefits of outsourcing jobs so far from the market it serves. Outsourcing experts have cited the change in call centre outsourcing to the fact that when customers phone up a help line, they prefer the representative they're speaking to be local, and to be able to understand the accent, which can sometimes have a heavy foreign lilt.

Looking forward to the next decade, it seems likely that the industry will support a more balanced approach to outsourcing, with a healthy mix of farming out business to both offshore and onshore third parties.

About the Author

Matthew Pressman is a freelance writer and frequent flyer. When not travelling, he enjoys golf and fishing.