Final answer:
Back-office activities are most cost-effectively handled in locations like the Philippines and India, due to low operational costs and a skilled, English-speaking workforce. These locations attract outsourcing from companies looking for significant economic savings and operational efficiencies.
Step-by-step explanation:
Back office activities are most cost-effectively handled in locations where operational costs are low, such as the Philippines and India, which offer a combination of economical labor and a technically skilled workforce fluent in English. Companies in the United States and Europe, like America Online, Citibank, Hewlett Packard, J.P. Morgan Chase & Co, Siemens Corporation, and Ericsson Telecommunications, have recognized these economic advantages and have been shifting call centers and other back-office functions to these countries. Outsourcing to regions with high levels of English proficiency and low employment costs, such as the Philippines and India, allows for substantial savings. As a result, the Philippines has seen a rise in outsourced jobs, positively impacting its economy. Similarly, India has attracted a significant amount of back-office work, especially in customer services and information technology. Given that global outsourcing is a matter of leveraging economies of scale, as demonstrated by Amazon's operational strategy, firms will seek to locate back-office activities in regions that allow for the reduction of average costs and a competitive edge in the marketplace.