Special Note: Why is Outsourcing Bad - http://bigoutsourcingguide.com/can-you-really-save-money-by.html.

Offshore outsourcing refers to services that a client company contracts from a vendor located abroad. These services often include labor, infrastructure or capital. More often in the last three to five years, offshore outsourcing refers to the information technology work performed for American companies by overseas Information Technology (IT) companies. What began over a decade ago as a cost-effective means to supplement overworked application developers has become a trend that dramatically affects the entire American IT workforce. Some say this trend will have a lasting affect on the American economy as a whole. The main reason many companies are now turning to overseas IT providers is profitability. IT work can be contracted to offshore companies cheaper than paying an IT staff. The practice began with the development of India's technology universities and training infrastructure. The programming skills needed are now readily available in many countries including China, Russia and the Philippines. Labor rates and related personnel costs in these countries are significantly lower than in the United States.

Outsourcing has become the norm in today's business world. Many might argue that outsourcing is not done just because of financial savings and gains, if managed correctly the company can cut labor costs and increased profits.

Offshore Outsourcing - http://en.wikipedia.org/wiki/Offshore_outsourcing

Special Note: Wikipedia.com is not a reliable source to reference most instructors will not accept it - however, I thought this still had some useful information for you to utilize.

The primary reason for companies moving their labor to offshore locations is to obtain comparative and strategic advantage offered by offshore locations in production of goods/services, especially in terms of costs and quality as well as availability of abundant and qualified work force. As competition between global companies is becoming intense and everyone is trying to capture more and more market share by offering superior products at lower costs, companies are setting up offshore operations in countries like China which not only offer abundant and qualified workforce, but also offer significant comparative advantage in terms of costs of overall production. Such comparative advantage has given significant edge to companies who are now aggressively targeting worldwide markets with better products at lower costs.

The major advantage of this outsourcing trend from the perspective of the company is the comparative and strategic advantage in terms of costs, quality, access to raw material and labor in these countries which not only make them more competitive but also provide them access to new markets. The advantage to consumers is availability of superior products at lower costs. Such outsourcing increases globalization and bilateral trade between nations and help developing nations to grow by doing more business with developed nations. The disadvantages associated with such outsourcing are definitely the loss of job for the domestic workers. Further, such outsourcing is often opposed by domestic companies as it makes them ineffective in front of the companies which outsource their production.

There is definitely an ethical bias in this trend. The ethical issues concerned with transferring domestic labor to foreign locations are those related to the loss of jobs and layoffs suffered by domestic workers, who have been dependent on these companies for years, and have served the company for years as well as remained faithful towards them. It is certainly an ethical dilemma in front of the company to layoff these workers to save high costs on labor in the country and transfer these jobs to countries which offer comparative advantage in terms of cost. It is a big setback for those areas and regions in the country where a large proportion of labor force is dependent on a particular company.

Strategic Outsourcing - IMPORTANT web site - http://www-935.ibm.com/services/us/so/pdf/aligning_relationships.pdf.