American Offshore Outsourcing - Essay Example

The research draws on the experience of EPAM using a case study and a semi-structured interview and using this particular offshore company as a basis, moves on from this example of a top ranking offshore company to the benefits that can be gained by American companies that offshore in Eastern Europe.Although outsourcing has become a particularly topical issue in the last two decades, economists have long foreseen that organizations would cease to undertake in-house all activities in the provision of goods and services.

Some of these activities would be outsourced to maximize profit and efficiency. Adam Smith wrote over 200 years ago that, “the maxim of every prudent master is never to attempt to make at home what it will cost him more to make than to buy” (Reilly et al. 1996). Yet, even Adam Smith could not have imagined that outsourcing would play such an important role in contemporary economic activities.In today’s competitive global market where companies are trying to find the most efficient and effective means of meeting their business objectives, outsourcing has become a key business strategy.

According to Johnson (1997), the complexities of contemporary businesses limit a company’s ability to carry out all its functions in-house, and therefore outsourcing is seen less as a tactical, cost-saving drive and increasingly as a strategic direction taken by the organization. Although outsourcing is not an entirely new concept, recent emphasis has changed the way we perceive it.It is important to clarify the key terms ‘outsourcing’ and ‘offshoring’, to prevent any confusion about their meanings and usage.