What is offshore IT outsourcing?

India is commonly cited as the symbol of the offshore IT outsourcing trend in the Western Hemisphere.

Offshore IT outsourcing is the business practice of hiring information technology (IT) work to employees located in foreign countries and generally working for lower wages. In developed countries, it is common for companies to avoid paying relatively high salaries to domestic IT workers by outsourcing the work. IT is especially well suited for offshore outsourcing, as both programming and software support are relatively easy to do remotely.

It has only been in the last few decades that offshore IT outsourcing has become viable, let alone attractive, for companies in the developed world. The increasing integration of networked devices means that employees in countries such as India and China, as well as Eastern Europe, can connect to systems around the world, virtually instantly, and perform all but the most complex IT jobs. , via the Internet. While physical hardware support, such as replacing a computer hard drive, must still be done in person, most operating systems and software packages are now developed with remote support in mind.

In technical terms, offshore IT outsourcing only occurs when a company hires outside contractors to complete the work for them. It does not apply when a company transfers part of its operations abroad or merges with a company abroad. It is of a different nature, for example, from companies that set up their manufacturing operations in Southeast Asian countries such as Vietnam or Singapore. Such behavior is not considered outsourcing, but rather known as offshoring.

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India is commonly cited as the symbol of the offshore IT outsourcing trend in the Western Hemisphere. India has a big comparative advantage over North American and European countries when it comes to a low cost of living and it also benefits from a high quality education. In addition, English is the main language of the country. Skilled Indian IT workers can undercut their Western counterparts in terms of salary, while still enjoying a good quality of life, in relative terms.

In recent years, offshore IT outsourcing has become a symbol of corporate indifference to the domestic workforce and local economic investment. In this way, it became a popular political issue in some countries, including the United States. A growing number of political candidates are running on platforms that highlight job protection and target companies that engage in practices such as offshore IT outsourcing. It is closely related to the global economic issues of free trade, fair trade and protectionism.

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