Outsourcing is an important part of the contemporary business environment. Outsourcing, and its related phenomenon offshoring, involves the shifting of some type of production, manufacturing or services to overseas location or completely shifting manufacturing or service facilities to an overseas location (Kroes, 2009). It is common knowledge that many Western enterprises have been actively engaged in shifting manufacturing and production activities to low-cost labor markets such as India and China for many years. Additionally, markets such as India specifically have become extremely popular as outsourcing and offshoring markets for processes such as business services. However, in terms of manufacturing and production, as the cost of transportation, shipping and tax structures have undermined some of these cost advantages with outsourcing manufacturing and production, advances in technology have allowed other low-cost markets to maintain their cost leadership in the outsourcing sector.
Purpose of the Study
The purpose of this study is to expand the knowledge of outsourcing. Specifically, to improve the understanding of how many enterprises are able to maintain cost-leadership in their industries through outsourcing solutions despite increasing costs associated with transportation, shipping and taxes, among other cost contributors.
Recent and expected increases associated with the cost of transportation have undermined the cost advantages that many outsourcing markets such as India and China have relied on to attract manufacturing and production contracts from international producers. However, technology advances and innovations have allowed low-cost markets to continue to be a leading contract manufacturing market for the world’s major international producers. Much of this technological innovation relates to the virtual environment and these technological innovations relate primarily to the underlying business motivation of cost reduction and efficiencies.
This research project will rely on a series of research questions to guide the project forward. These research questions are detailed below:
- What are some of the business processes that are commonly outsourced to low-cost markets?
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