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Offshoring has become very attractive for many companies especially in the US and UK primarily for the promise of significant cost savings. Offshoring locations such as the Philippines, India, and China offer relatively low costs in labor and operations. By transferring work offshore, companies can take advantage of labor arbitrage, with necessary work being done at a cost lower than if it is performed in-house. They are able to minimize overhead and infrastructure costs as well as employee management issues.

While cost savings may be the number one reason to move one or more business functions outside the country, there is more to offshoring than the cost advantage.

• Focus on core business functions
  Now that some processes are out of the way, businesses can concentrate on core tasks, at the same time having other people finish non-core but important processes that form part of the entire business operation.
• Gain access to a new pool of talents
  Who wouldn’t be tempted to transfer work to a country with highly skilled employees who can do the tasks at a much lower cost? The Philippines made a mark in the industry for its workers who are efficient in voice-based work, while China is an ideal destination for manufacturing-based processes. Offshoring makes it possible for companies to gain access to a large labor pool which is not available locally and save a lot in the process.
• Enter new market areas
  Offshoring helps companies expand and have local presence, taking advantage of local knowledge and bringing production and/or delivery closer to their target markets.

Companies have varying reasons for transferring work offshore depending on their business goals. Whatever the reason is, offshoring will only be effective and beneficial if it results to huge cost savings and high quality deliverables for the company.