Technology also facilitates to deal with a traditional disadvantage of off shoring: adapting to changing customer demands. Good Market Responsiveness can be achieved even when a product is not manufactured or assembled at a location near the customer.

With economies in the developing countries stabilizing, the risks of offshore outsourcing have diminished.

In some cases "the market" of the future is actually the Asian countries so it's advisable to be there.

7. RISKS OF OUTSOURCING

Outsourcing began transcending IT and payroll to include software applications through the "application service provider" model and a "managed service provider" system whereby vendors host and maintain a company's software on the vendor's off-site system or manage company networks of hardware and software at the company's site. By the late 1990s, the rise of the Internet had enabled companies to outsource entire business processes and professional staff that traditionally were internal. Internal auditors and financial reporting and tax professionals, for example, are now candidates for out-sourcing. Now also ripe for outsourcing, are more critical business processes, such as customer support, cash management, tax preparation, accounts receivable, and accounts payable.

Outsourcing can also cause significant risks if it isn't managed effectively and should be analyzed beforehand from the perspective of enterprise risk management (ERM).
Outsourcing can involve the following risks to an enterprise: -

Strategic / Market Risks

Operational Risks

Financial Risks

Human Capital Risks

IT Risks

Legal / Regulatory Risks

Reputation Risks

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* Contributed by: -
Priyanka Ghosh & Alvika Derhgawen,
PGDIM, IM-11,
NITIE, Mumbai.