Offshoring can be a key strategy for organisations to remain competitive and strengthen their position in the market. When well executed, an effective transition can unlock the value of an outsourcing engagement, thereby laying the groundwork for a relationship that can last for many years to come.
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Is transferring your services overseas cost effective?
Offshoring is primarily a geographic activity. In the West, goods are expensive because the staff required to produce and distribute them are costly. In the developing world, by contrast, vast inexpensive labour pools provide an easy bedrock for a low-cost economy.
Offshoring takes advantage of these cost differentials by relocating services or factories from costly countries to the cheaper economies in order to provide or sell the goods back in the West at a hefty discount (and profit). Alongside technological improvements, it has been the decades of productive offshoring that has lowered the costs of consumer goods such as clothing and electronics.
Offshoring does not only relate to the production of physical goods, but also services. The Indian IT industry, for instance, has been powered by waves of offshoring by technological companies in the West.
As with outsourcing, the activity has the potential to save money for both seller and consumer. Advocates also argue that these actions can stimulate wealth in some of the world’s poorest countries and provide jobs for those who are in the deepest need of aid.
Offshoring programmes can seem horrendously complex, does TUPE apply? Does it not? Is it a redundancy situation? Do you need to offer relocation? Is it still going to be cost effective? Is the service to customers going to be as good as it is now?
All of the questions are completely normal when faced with the challenges of offshoring areas of a business and we have the answers to many of your questions, if we don’t then we will work through them with you to ensure we get it right.
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