What is offshoring

Offshoring or Global Sourcing is the process of relocating an enterprise’s business operations, either in part or in whole, to another country with the primary leverage being talent availability and cost efficiency. Global Sourcing or Offshoring began as a means to take advantage of the cost arbitrage, but now enterprises offshore or outsource to not only minimize the cost, but to take advantage of skilled workforce, technology and technical prowess, economies of scale, 24X7 customer support, risk mitigation and better streamlined processes. Historically, enterprises have outsourced/ offshored their production and/or their services depending upon their strategic business imperatives and their capital budgeting strategy. Global sourcing or offshoring, which began as a means to get more cost-effective resources, has matured into a business enabler. It allows an enterprise to not only reduce labor costs, but it gives it ready access to a young and vast talent pool; round-the-clock availability to service and support customers; and, reduces dependence on a particular geography and mitigates geophysical and political risk. Global sourcing/ Offshoring today, can be divided into various business areas. These are:

  • Production Offshoring which entails the relocation of the physical manufacturing process overseas, usually at a much lower cost in terms of labour and materials.
  • Systems and Software Offshoring which entails accessing the highly-skilled talent pool available in certain countries which offers significant cost advantages and shorter production cycles.

The business case for offshoring has been proven repeatedly. Enterprises that offshore have found various niches, besides cost arbitrage, which have proved to be significant growth drivers for the business. Besides a high-profit margin – cost arbitrage, enterprises have access to talent, and they have the opportunity to scale much faster than onshore. Remember, offshoring does not increase your administrative burden. Enterprises can leverage all the real, tangible business-enabling benefits of offshoring with the support of an able and experienced offshoring partner. Gloplax has broken down all activities that need to be completed to operationalize and operate an offshore center, along with the necessary resources, like, templates, tools, industry data, support vendor information that one needs in a comprehensive playbook known as GUiDE. Check it out to understand the process of setting up a GCC

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