Origination of Outsourcing

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In an effort to drive down costs, businesses began analyzing the areas that largest contributed to their expenses. Labor cost turned out to be substantial thanks in large part to the prevailing trends and government regulations in developed countries. It emerged that the developing nations like India, Sri Lanka, Philippines and China enjoyed a lower cost of living and consequently lower labor cost. Fortunately these nations also had a strong group of workers who had computer skills, English language skills and excellent work ethic. At the same time, advances in telecommunications and the Internet took place. Suddenly transmitting data was remarkably simply and cheap.

The combination was irresistible. Quality staff could be recruited for a fraction of the cost and customers located in the US could be serviced from India. Pretty soon a number of businesses having high dependence on their labor force began the process of offshore outsourcing. Today it is a well-established industry with a number of players in the fray ranging from large captive enterprises to extremely competitive third party vendors.

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