The world no longer consists of insulated nations. The rapid developments in telecommunications have given a great deal of encouragement this movement. The entire world is slowly turning into a common market, with the Internet playing quite a big role in this development. The expansion in e-commerce is an example of how people from Canada can just as easily sell goods to those in Australia as they might to people a few buildings away. Businesses, both big and small, have not been slow to react to the need to reach out to a great diversity of people.
One of the consequences of this coming together of the world is seen in the growth of off-shoring. Why should a company decide to take to off-shoring? The primary reason for this is that companies want to reduce their expenditure as far as possible. If this means having a setup on a different continent so that the costs may decrease considerably, so be it. Transportation is certainly not a problem in the world of today. So China and India have emerged as top off-shoring destinations for countries from all parts of the globe.
A frequent mistake that we all make is to assume that off-shoring is the same as outsourcing. Well, let me give you some low-down about the two. The two are quite different. Outsourcing generally means giving out a contract to do a piece of work to an external company. However, off-shoring refers the transferring of a part of the operations to a different unit (either of the same company or a different one) but which is situated on different shores. Outsourcing could be done within the same country, but not off-shoring. The latter necessarily refers to a geographical distance.
Off-shoring is usually of two main types. These are production off-shoring and services off-shoring. The main example of production off-shoring can be seen in the case of China, where production costs are low. Thus, companies that want to save on their production costs usually rush off to Chinese locations to produce their goods.
As far as services off-shoring is concerned, India is a great case in point. Thanks to the amazing expansion of the telecom industry and thanks to the great Internet boom, after the 1990s, there was an opening for nations which would incur lower costs to enter the services field. Thus, India, with her pool of English-speaking people turned out to be very suitable.
Of course, off-shoring is today becoming a global phenomenon, and it continues to become more and more popular everyday.
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