Offshore IT Outsourcing

The shifting geography of business processes can de defined as the third wave of geography-related change in the design and operation of corporations. During the first wave, the improving transportation infrastructure of the 20th century enabled corporations to seek effective production capabilities in increasingly far-flung locations that provided access to new markets and tangible resources — land, local factories, mines, and production workers. During the second wave, as capital markets became global and interconnected in the latter half of the 20th century, corporations began to capitalize on vibrant global financial markets for both debt and equity. Now we are in the midst of a third wave — in which digitized business processes like order processing, billing, customer service, accounts and payroll processing, and design and development can be carried out without regard to physical location (Venkatraman, 2004). According to Kaiser and Hawk (2004), all executives need to explore offshore outsourcing. Competitors’ use, or perceived use, makes evaluation inevitable. Even IT organizations that choose not to use offshore companies must be able to convince their senior management that they have carefully considered the option. Those who do choose to outsource need to decide how they want to work with an offshore organization.