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From what I can tell, a company will offshore for the following reasons:
1) Reduced labor costs. Many companies will move their factories overseas where labor is plentiful and labor costs are cheaper.
2) Strategics. Many companies desire to tap into new markets and talents not available domestically, and to avoid domestic regulations, taxes, and tariffs.
3) Emerging IT Superiority of Third World Countries. China, especially, has made a push in recent years to become a provider of technological services, particularly in the area of software engineering.
4) Call Center and Customer Support. Due to its highly educated population and honed people skills, the Phillipines is often looked to for outsourcing in these areas.
Even though there are risks with data security and privacy issues associated with off-shoring, some international companies feel it is worth engaging in. They take a look at where costs can be cut and where best to cut them. As with any domestic expansion project, these companies do their homework. Plans are drawn up, land is acquired, construction bids are taken, workers are hired, and finally production facilities are built. They take great care to insure everything is done to the satisfaction and requirements of the country they are locating in.
Enough success is achieved by off-sourcing that companies today continue to use it as a lucrative business tool.
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