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Offshoring – Key element of business strategy in global economy June 12, 2008

Posted by Bipin Agarwal in Global Economy, IT Offshoring - Future Direction.

Ask the question “What is offshoring” answer will depend on who you ask.

somebody from China – Move manufacturing to China, India – Move your IT work to India, Germany – Move your engineering to Germany, Russia – Move your satellite Launch to Russia, USA – Move your innovation to Silicon Vally and investment banking to Newyork.

Offshoring has been used for thousands of years. East India company went to India and started trading spices and cotton, etc. that is the situation where offshoring was used as part of business strategy.

How can global company use offshoring as a competitive advantage. Leverage the core competency of people in different part of the wold and also the natural resources that are available in different part of the world. However, that is the entry point. From there, learn the local culture, build operation and sell them your product and services customized for them. Future of offshoring will be defined by the companies that will use this as a entry point in a country and expand from there. Those who will use offshoring just for leveraging the cost differential, will continue to chase the cost advantage and be marginaly successful.

Currently some of the large technology company, Dell, HP, Financial services company such as HSBC, Citi, DB, consumer company, P&G, Sony are using offshoring the right way, others are just working on the cost differential. True offshoring strategy should be a long term competitive advantage.

If you have a question, about offshore strategy, feel free to ask.


Bipin Agarwal


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