Outsourcing and offshoring

1.1 Introduction

Outsourcing and offshoring is often associated but neither implies the other. Outsourcing is the management or daily execution of a business function by a third-party service provider while offshoring refers to outsourcing to areas that are geographically remote from the business. Offshoring has moved on to a broader range of activities including engineering, manufacturing, software development, call center and other high skilled human task. Offshore has become a potential movement due to the increasing and significant size of the services sector in the Western economies. The most preferable location to offshore are India, China, Bangladesh, Philippine, Thailand and Malaysia due to low labor cost and skilled work force.

1.2 Origin of the Study

This report is prepared as a requirement for completing the course of MBA. The report is designed to provide the MBA students some opportunities of obtaining knowledge of the offshore accounting and aims at theoretically energized the students. Our course instructor Mr. Abul Khayer has authorized and provided support to prepare the report.

1.3 Objectives of the Study

Objective of the study is to know the nature of offshore accounting, why it is phenomenal in advance economy, countries performing offshore accounting and reason behind it, risk and risk resolving process of offshore accounting and Bangladesh perspective. Another object is to the completion of the course “Business Statistics’’ in MBA program.

1.4 Methodology of the Study

This study is exploratory in nature. I tried my best to make the report informative and handy. The report has been written on the basis of information collected from secondary sources such as internet, newspaper, journal and book.

1.5 Limitations of the Study

It was a great experience and opportunity for me to know something about offshore accounting. But there was a limitation and which is lack of information. Adequate and in-depth well organized information is not available to access.

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2.1 Offshore Accounting

Offshoring refers to the repositioning of jobs and methods to any foreign country without distinguishing whether the provider is external or associated with the firm. Offshore accounting is mainly outsourcing the accounting activities to separate countries to gain gaining access to limited skills, cutting costs and attaining competitiveness.

According to the Venkatraman offshoring is “the practice among US and European companies of migrating business processes oversees to India, the Philippines, Ireland, China, and elsewhere to lower costs without significantly sacrificing quality.” (Venkatraman, 2004)

In recent times, developed countries companies are doing the outsourcing accounting activities to vendor firms which are located to developing countries.

2.2 Services Provided by Offshore Accounting

2.3 Offshore Accounting is Increasingly Phenomenal in Advance Economy

BDO’s Service 2020 report, based on the responses of more than 500 business leaders around the world, found that more than 46 per cent in the Asia-Pacific region plan to outsource in the next decade, up from just 14 per cent today. And of those that say they will outsource, about 40 per cent plan to go offshore. Other statistics confirm the popularity of outsourcing, exclusively in professional services firms.