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What is offshore outsourcing?

Outsourcing refers to the subcontracting of intermediate components in the business process of an organization to external parties to leverage synergies of technical expertise and core competencies to ensure that together both parties provide superlative value to the end customer.

Offshoring and outsourcing are related concepts, but they are not the same. Offshoring refers to capitalizing on lower cost labor, yet providing high quality, in less developed countries. Outsourcing is one approach to attaining those benefits. But it is also possible for a company to set up its own offshore operation either wholly owned (which has the risks of high cost and inadequate understanding of the foreign country market), or as a joint venture with a local partner.

A more reliable concept, Offshore Outsourcing (of software), is simply software development at a location in another country, at a facility connected with the client's location using high-speed data communication links to allow engineers and managers to communicate on a real-time basis. Clients on the other side of the globe can monitor developments and project milestones on an up-to-the-minute basis, ensuring both quality and progress.

As the role of Information Systems and Technology in any organization grows, there is an increasing need for the organization to look at outsourcing as a strategic tool to ensure competitiveness and higher quality of service. Moreover, the changing nature of software projects (from the earlier fixed time / fixed price software projects to application management contracts that focus on the delivery of defined services) also makes it more difficult for organizations to justify the overhead of maintaining a highly specialized IT team for in-house software development. In these situations, an outsourced relationship allows the client to fix clear Service Level expectations and also define clear ROI goals.

Offshore Outsourcing has proved to be a differentiating factor for companies, offering cost, time and quality advantages. Today, it is common practice to outsource development requirements for:

  • Expertise in latest technology
  • Rapid deployment
  • Lowered Costs