Offshore Outsourcing in Service Sector Essay Example | Topics and Well Written Essays - 2000 words

Offshore Outsourcing in Service Sector - Essay ExampleThis essay stresses thatfirms face complex decisions as they outsource reorganize the order chains as offshore outsource some activities. The firms consider the cost reduction, standardisation of product quality, human capital and risks involved in reorganizing their value chains. The reorganisation of value chains have tended to retain the knowledge oriented skills in the industrialised nations while the lower value added functions are transferred to developing or slight advanced countries. Certain industries demonstrate path dependent tendencies towards concentration of the processes and people in certain localities of the advanced countries such as the Silicon Valley in California.As the paper highlightsthe geographical concentration is driven by the access to talented software engineers and programmers. The proximity to large pool of sophisticated users also driven the neck of the woods concentration of such firms. The fir ms have realised the economic gains of geographically separating the programming functions to lower cost countries overseas while the introduction of networked computer terminals have added to a greater extent impetus for relocation of the routine functions.Offshoring software development in Ukraine is driven by the culture of research and availability of highly talented personnel delinquent to reliance of IT technologies. The increased competitiveness has forced firms to reengineer in order to seek new knowledge and arbitrage costs.