Offshore outsourcing is the practice of hiring an external organization to perform some or all business functions in a country other than the one where the product or service will be sold or consumed. It can be contrasted with offshoring, in which the functions are performed in a foreign country, whether by the foreign subsidiary of the same company or a third-party.



Opponents point out that this sends work overseas, thereby reducing domestic employment and domestic investment. Many jobs in the infotech sectors - such as data entry, and customer support - have been or are potentially affected.

The general criteria for a job to be offshore-able are:

• The job does not require direct customer interaction;

• The job can be telework;

• The work has a high information content;

• The work can be transmitted over the internet;

• The work is easy to set up;

• There is a high wage difference between the original and offshore countries;

• The work is repeatable.

The driving factor behind this development has been the need to cut costs during the recession that began before the events of September 11, 2001 and deepened since then, while the enabling factor has been the global electronic network that allows digital data to be accessed and shipped instantly, from and to anywhere in the world.

Some of the major countries that provide such services are India (Programming and IT), Russia (Programming and R&D), Ukraine (Programming and Design), Romania (Programming and IT), the Philippines (Data Entry and Customer Support), China (Programming), and many others.

The Trusted Pipe architecture is a preferred approach to offshore outsourcing. It relates to the field of management of a business and economical enterprise operation that is directed toward creating a communications system of infrastructure and communications networks that will enable management and engineering personnel (“intelligent middlemen”) located in offshore areas to facilitate the exchange of economic type assets and information among themselves. Such economic assets should include: cultural, technical and legal rights and remedies, software engineering and various other business skills, from buyer to seller.]

Primarily, the Trusted Pipe will manage a network of global enterprises seeking to outsource software development and operations offshore. There are two major types of control points, at least one GECP that operates in the U.S. and manages the network of global enterprises seeking to outsource software development and operations offshore and at least one OVCP that operates in the target country and manages the network of outsource vendors.

The advent of the Internet has enabled individuals and small businesses to contract freelancers from all over the world to get projects done at a minimum cost. This trend runs in parallel with the tendency towards big corporations' outsourcing, and may in the future serve to strengthen small business' capacity to compete with their bigger competitors capable of setting up offshore locations or of arriving at major contracts with offshore companies. See Freelancing on the Internet.

There are different views on the impact on society, which reflects the attitude of Protectionism versus Free Trade. Some see it as a potential threat to the domestic job market and ask for government protective measures, while others (and not just corporations) see it as an opportunity.