Analysis Of Costs And Revenues In The Offshore Outsourcing Of International Corporation

This paper examines the revenues and costs in the offshore outsourcing of theinternational corporation, and then gets a decision model. This paper presents acomprehensive analysis of the factors determining the decision of offshoreoutsourcing from the angle of broad sense of revenues and costs. Revenues includethe short-term incomes from the increase of production, and the long-term incomesfrom the rise of core competitiveness and competitive state, the establishment ofreputation, etc. Costs can be divided into three parts: the costs of the earlier period,the middle period and the later period, such as the transaction costs, the risk costs, etc.Game theory is used in this paper to analysis the reputation revenue and thebargaining cost. On the base of analysis, the paper models the offshore outsourcingdecisions at last and then gets the conclusion: the offshore outsourcing will be carriedon unless the rise of revenues excess the rise of costs. Finally, the paper gives thesuggestions for those Chinese corporations to undertake the offshore outsourcingbetter.