The Offshore outsourcing, or “offshoring”, denotes to outsourcing to firms in foreign countries, often to take advantage of labor arbitrage. In the past 10 years, business process outsourcing contracts have progressively more been given to firms in developing countries. Typically educated workers in developing countries, such as India or China, work for a much lower wage than do alike educated workers in developed countries, like Japan. Savings from the lower wage rate must go beyond the increased costs of management and risk connected with offshore outsourcing for it to be economically viable.
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