Offshoring: Evolution or Revolution?

Abstract

This chapter describes the emergence of offshoring. It defines relevant concepts, and documents its rapid growth. The factors differentiating offshoring from outsourcing are discussed, especially access to markedly lower costs, extra risks, and cultural differences. A methodology for deciding what processes to offshore, and establishing, maintaining, and renewing offshoring projects is proposed. Offshoring is no longer the preserve of organizations; individuals can obtain an increasing variety of services from overseas. Offshoring is contentious because it threatens to replace high-paid jobs in First World countries with less well-paid Third World jobs. Most outsourcing depends on organizations’ ability to transfer data instantly, accurately, and at nearly zero marginal cost. This chapter suggests that the ramifications for individuals, organizations, and societies of this technical advance are underestimated. Further research, especially on the ramifications, is suggested. The difficulty of researching offshoring, a sensitive topic for many organizations, is noted.