Offshoring

November 3, 2008 at 6:48 am Leave a comment

There is an old saying that “there is no place like home”It is true that the core business functions have to be controlled from the place where one resides. The classic management theories have taught us that the business processes are all linear and are more or less self contained. There is one set of processes responsible for producing, selling, distributing and servicing of products (or services) and other set such as Human Resources, Finance etc which is supposed to support these “primary” processes. This theory, in one form or other, has been embraced for the last several decades.
Today, we hear more and more the terms “customer care” or “customer relationship management” where the enterprises have realized that it is their customers who have the power to decide their success or failure. Globalization and Internet among other many factors have contributed to the intensity of competition where customers have a choice and where the vendors have to dramatically increase their focus on their customers in order to maintain their loyalty and business relationship with them. Today the businesses are driven by Time, Cost, quality and focus.

Companies use information technology as a competitive advantage over the others. We can see changes everywhere and it seems that only thing constant in this world is a change. Some 20 years ago offshore industry was small and mysterious. Companies used to believe in owning everything. Now there has been a significant shift and there is a clear trend of businesses to outsource what is not a core asset or operation. Companies have realized that the laser like focus on their core competence will only lead them towards the success. The increasing demand for offshore facilities has resulted in growth of offshore services. Over 60% of the world’s money flows through offshore today. Offshore facilities due to advances in technology and telecommunications became an integral and important part of the world’s financial system. They are used worldwide, twenty-four hours a day, 365 days a year. The restructuring of the modern organization through outsourcing continues at an unrelenting pace. Organization after organization, from the largest of the automobile manufacturers and petroleum companies, to the fastest growing start-up, to governments from the U.S. to Australia to Europe are outsourcing more and more of their operations. Outsourcing’s effect on the essential structure of the modern organization is profound and pervasive.

Offshore outsourcing, simply put, is to outsource non-core business functions to an internal or external team situated in a lower cost nation. Locations that are popular include India, China, Philippines, Russia, Brazil and Israel.

Why go offshore?

  • For Investment purposes
  • Improve customer satisfaction
  • Increase Revenue or market share
  • Improve customer management
  • Improve business efficiencies
  • Gain competitive edge
  • Improve business processes
  • Increase productivity
  • Reduce operating costs
  • Avoid capital expenditure
  • Make each activity a priority
  • Save on manpower and training costs
  • Leverage the provider’s extensive investment in technology, methodology and knowledge workers
  • Minimize overheads, free up resources

Entry filed under: Offshore, Outsourcing. Tags: , .

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