No Such Thing As 100% ‘Offshore Outsourcing’: Vendors And Clients Benefit From Leveraging Resources

June 16, 2011

As the growing debate over outsourcing continues and as political and popular discontent grows in the U.S., studies indicate that the term outsourcing is a misnomer for a myriad of sourcing strategies.

Tower Group Research conducted research in the past that revealed U.S. financial firms sold $200 billion to markets around the world. This has offset $1.3 billion that would normally go offshore. Apart from fears about shipping jobs overseas,  sourcing strategies offer a wide variety of options for increasing benefits to the American economy. Global sourcing created operational efficiencies of $1.2 billion in a research conducted in 2003. Additionally, $0.4 billion has been sidelined for innovation. That figure has grown substantially by 2010.

Senior Analyst at the Financial Services Strategies & IT Investments, Virginia Garcia comments, “In the end, it pays to join the global village.” Of the $200 billion that went to international markets, a sizeable portion has gone to U.S. vendors. Outsourcing enterprises like IBM are examples of companies benefiting from a global outsourcing environment.

In a controversy that seems to suggest that outsourcing is a one-way street pertaining to job creation overseas, there is much evidence that shows that outsourcing is creating jobs for Americans too. In essence, global firms conduct business globally. For instance, India’s no. 2 outsource Infosys has on-site facilities in the U.S. Recent news report suggests that Infosys is hiring U.S. engineers, fresh out of college as a loophole around restrictions involving the H1B visa. Moreover, visa fees to the U.S. have also seen an increase this year. Under this economic climate, Infosys saves money by hiring U.S. employees.

In many ways, it makes little sense for multinational firms not to source globally and this has been ongoing for many decades. This also enhances their economic and logistical outlook. When ‘captives’ of financial firms open their IT and BPO shops abroad, this qualifies as “offshore insourcing” rather than “offshore outsourcing.”


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