Offshore outsourcing is a unique phenomenon that has been known for ages but bloomed within high technologies and web development. Developed countries used outsourcing to less developed countries since ancient times.


In 1776, Adam Smith in his The Wealth of Nations formulated a theory of competitive advantage extracting the notion of outsourcing as a way to cut costs by hiring cheaper labor in less developed countries. The US and other developed countries used to outsource services to such countries as Canada, Mexico and South America even before the IT revolution with the growing number of factories and plants in cheaper regions. The IT revolution changed it all. It has changed the whole idea of offshore outsourcing services making it the fastest-growing market over the globe.

In 1970s, many US computer companies outsourced their business offshore for processing. Word processing, accounting services, payroll and billing were outsourced all over the world now.

The development of IT and WWW made the world crazy about outsourcing services as it became much easier to do your business elsewhere. Outsourcing accumulated $298.5 billion in global revenues. At least 3.3 million US jobs and $136 billion in wages will be outsourced to India, China, Russia, Ukraine, Pakistan, and Vietnam by 2015, according to Forrester Research. Europe is expected to grab some 25% of total global outsource spending.

With the creation of World Wide Web back in 1990 outsourcing became very profitable. That led to a shift in general business strategy towards doing some core business and offshore all the other businesses, mainly using e-business. It means that most of the companies now try to figure out what is the most important thing to focus on and outsource the rest. On the other hand, it allows the companies, especially small businesses to cut costs and take profit from the flourishing offshore strategies.

Actual information systems outsourcing took its first steps back in 1963 when Electronic Data Systems (EDS) signed an agreement with Blue Cross of Pennsylvania for the handling of its data processing services. Later, outsourcing of e-business to a third party became a target for both smaller businesses and giant corporations like IBM.

Once you feel you and outsourcer are quite compatible and can cooperate easily it is high time for you to start outsourcing certain e-business functions. This may contain web site design, web site marketing and promotion, search engines optimization, email and viral marketing and other IT services. Still, you have to remember that outsourcing cannot rescue the company that is in a big financial trouble. It’s more like a supporting device for those that intend to expand their business or simply cut costs for further investments. It may take long time before you get positive results from offshore outsourcing and maybe you should seek other options if you need urgent actions. But needless to say that outsourcing is probably one of those tools that can be useful for every company.