From the course: Accounting Foundations: Global Finance and Accounting
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Outsourcing of production and offshoring of labor services
From the course: Accounting Foundations: Global Finance and Accounting
Outsourcing of production and offshoring of labor services
- International outsourcing of physical production and offshoring of service activities are both efforts to lower operating costs, but there are both benefits and costs of shifting production facilities and labor activities to foreign countries in search of lower operating costs. Of course, the primary motivation for international outsourcing and labor offshoring is reduced costs. This advantage can be seen with the example of software developers. The total compensation cost of qualified software developers ranges between $10 and $40 per hour in Asian countries, such as India, the Philippines, Vietnam, and China. Software developers with similar qualifications costs between 100 and $170 per hour in the United States. There are additional benefits to international outsourcing and offshoring beyond the cost savings. As with domestic outsourcing and telecommuting, international outsourcing and labor offshoring allow a company to focus on its core competencies while subcontracting with…
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