Question

A healthcare organization in Canada outsources its insurance work to a service provider in South Asia. The employees in South Asia used to receive less than half the salary that the employees in Canada received. But in recent years, there has been a rapid increase in employees salaries in South Asia. Slowly, the healthcare organization is reducing the level of outsourcing and is employing people in Canada. Which of the issues associated with offshore outsourcing describes the above scenario

Answer 1

Diminishing cost advantages

Step-by-step explanation:

Diminishing cost advantage is a decline in the coat benefits that offshore outsourcing offers.

Offshore outsourcing occurs when a company outsources part of its operations to a foreign company.

The main benefit of such a move is a reduction in cost.

However when the benefits decline it is referred to as diminishing cost advantage.

In the given scenario employees in South Asia used to receive less than half the salary that the employees in Canada received. But in recent years, there has been a rapid increase in employees salaries in South Asia.

This will result in more cost for the company through its outsourcing activity