Offshoring

Offshoring is an irreversible trend that is already expanding to include not just routine processes but also the core activities of Western service firms (Jagersma and van Gorp).

Information about Offshoring

Offshoring was established as a business practice more than 50 years ago (Lewin and Peeters, 2006). In the early days and subsequent four decades, it primarily affected manufacturing work. The driver behind this phase of offshoring was to cut costs by shifting manufacturing or assembly operations to low wage countries. Essentially, this enabled firms from high-cost economies to align their cost structures with global competitors and gain better access to emerging markets by establishing a presence there. Since the late 1990s the offshoring of business and IT processes has become common and is mediated by advances in information and communication technologies and the development of stable, secure and high-speed data transmission systems (Lewin and Peeters, 2006). Declines in shipping costs, the proliferation of the internet and decreasing communication costs mean that, increasingly, organisations can afford to locate activities in whichever country offers a cost advantage and favourable environment (Garner, 2004).

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