Pros And Cons Of Offshoring

According to Oxford Dictionaries (2015), offshoring is “The practice of basing some of a company’s processes or services overseas, so as to take advantage of lower costs” (pp. 1). An enhanced definition for offshoring is: “The moving of various operations of a company to another country for reasons such as lower labor costs or more favorable economic conditions in that other country” (Business Dictionary, 2015). Offshoring is also known as outsourcing; many people seem to dislike offshoring, because they associate the word outsourcing with job loss. This paper will provide insight into ethical dilemmas associated with offshoring.

In India, a company can hire ten engineers’ verses hiring one engineer in the United States; the reason is employee compensation. In the United States an engineer may be paid $80 thousand per year and receive company benefits and 401k plans. From an ethical perspective, taking jobs from the United States and putting them into another country lands citizens’ in the unemployment line. Most companies try to evaluate the consequences of outsourcing certain aspects of the business then make a uniform decision (Friedman, On Justifying Outsourcing and Offshoring, 2012). There are several pros and cons to outsourcing.

Main advantages for businesses are cost

Understanding the requirements of a project is extremely important, but if a company cannot communicate proficiently the work will likely be incorrect. The third party company may not acquire resources that research the company culture, and have the ability to engage in knowledge transfer (PRLog, 2009). When outsourcing to a company in India a company must also work with the time difference. Since the third party company is outsourced, there may be rework needed as industry standards change daily. The biggest reason people tend to shy away from offshoring, where possible, is because outsourcing usually means job