Offshoring is the practice of a company relocating itself or its business processes from an developed country to another. In most cases, the processes are outsourced to a less expensive, undeveloped nation.  For instance, popular destinations include India and the Philippines.  In these recessionary times, companies are looking for any measure they can find to reduce costs. While the level of skill and expertise of offshore labor has increased sharply in recent years, wages have been slow to catch up. This offers huge opportunities for companies doing business in countries like the United States and Europe.

Offshore entities can be complex offshore tax havens, or simply traditional call centers.  Businesses use of offshoring as a tax haven is a controversial issue and has become a hot topic in the US.  US corporations have routinely been exploiting a loophole in the tax code that encourages them to keep profits earned overseas where the money was made.  Currently, US taxes are only levied when the companies bring their profits back home.

In addition to the tax issues, critics of offshoring are concerned that outsourcing hampers employment opportunities at home.  Critics also suggest that homegrown talent could dry up if too much skilled labor is sent offshore.

Critics maintain that bringing jobs home will be difficult for big business once the offshoring process has begun.  They feel that corporations will stick with business process outsourcing once large investments have been made to see it through.

Proponents of outsourcing assert that the process makes them more flexible and financially stable.  The majority of offshore outsourcing still consists of services such as customer support and outbound telemarketing.  These front office functions are very easy to move back and forth if necessary.  Moving these business functions overseas can help corporations improve their balance sheet.  Supporters of outsourcing also suggest that the money saved on these services allows them to create more high-value, skilled work domestically.

It currently appears that the shift of both low and high skilled labor to foreign countries will continue to proceed. Some experts are predicting that about 25% of jobs now in the US IT sector will be overseas by the end of the decade. In the meantime, companies are proceeding with caution to avoid talent abandonment and maintain performance. At the same time, many companies will find ways to take advantage of the changing global marketplace to make their businesses more perform better.  The hope is that the improved performance will allow them to create new, innovative, high-skilled work at home.