Offshoring is the practice of a company relocating a portion of their business from one country to another. For many American companies this means having a group of customer service representatives in India. Offshoring is different from outsourcing, when a company participates in offshoring it is still the employer of the people working in the foreign country. If a company outsources, the company is subcontracting another company to do their work. Both offshoring and outsourcing can be found in India.
I think most people have dealt with a company that offshores some type of support area. I recently had a problem with my Dell computer. I went online for help and was connected with Sandeep. I am not sure where Sandeep was located, but the name was a clue that he was probably offshore. Sandeep had my computer fixed via a remote connection within 45 minutes. He even fixed my CD drive that had not worked in over a year, the same CD drive that my IT colleagues could not fix.
This paper will focus on companies and industries that participate in offshoring along with why and how these companies operate in foreign countries.
What Companies are Offshoring?
Offshoring did not begin in the 21st century, it began in the late 70's when China opened its' doors to the world (Friedman 2005). China began manufacturing everything from underwear to televisions and toys for companies such as RCA, Nike and Mattel. Since that time, manufacturing jobs were lost in the U.S. due to the low labor costs in China. In the last 5-10 years the advances in computers and technology has enabled companies such as HP, Microsoft, Intel, Dell, Oracle and so many others to have support areas of their companies operating offshore where the cost of labor is more economical.
HP began offshoring what they call "level 1" support offshore in 2006. This level of support is the initial contact with the customer to determine what the problem is (Thibodeau 2006). At the...