Outsourcing and offshoring are two similar concepts that are often lumped together. By definition, the former is to purchase or subcontract from an outside source; the latter, on the other hand, can be done both within and outside a company.
By contrast, India's offshore outsourcers have made their billions through software services. Wipro (nyse: WIT - news - people ), Infosys Technologies (nasdaq: INFY - news - people ) and HCL Technologies all have C-level executives who have worked their way to 10-plus digits through companies that provide global software and IT services.
"The economics behind offshoring are really compelling, and customers usually do it for three reasons--they want specialized firms, [they want] to cut costs, and [they want] access to talent or specialized skills," said Robert Kennedy, a professor at the University of Michigan Business School.
The executive director of the William Davidson Institute, a nonprofit research and educational institute dedicated to the changes affecting companies in transition and in emerging market economies, Kennedy points out that it's often contract manufacturing businesses that offshore. These businesses have a need for specialized companies like Quanta or Hon Hai, and companies looking for software services are generally more focused on reducing costs and finding fresh talent.
There is such a rapid development of capital markets in other countries that even small discrepancies in salary and the cost of labor are significant. These billionaires have capitalized on the fact that developing countries are growing two to three times as quickly as countries like the U.S., essentially fueling an offshore outsourcing trend whose expansion appears to have few boundaries.
