Executive Briefings

U.S. Businesses Not Losing Their Zest for Offshoring

Offshoring may be getting less airtime as a political wedge issue this year, but by no means has the practice fallen from favor. A new study, in fact, sees companies increasing their use of offshore resources by 50 percent in the next three years, while cutting costs by up to half through the use of cheaper overseas labor.
Companies often face a choice between offshoring parts of their businesses to foreign firms or using "captive" models, for which they set up their own operations and hire staff in another country. But according to the research by The Hackett Group, both practices bring the same cost-cutting benefits--even if the former tends to be faster and easier to implement initially. Captive programs, though, tend to produce more innovation and better customer service, because companies pick their own people and can more easily monitor them.
Source: CFO, http://www.cfo.com

Offshoring may be getting less airtime as a political wedge issue this year, but by no means has the practice fallen from favor. A new study, in fact, sees companies increasing their use of offshore resources by 50 percent in the next three years, while cutting costs by up to half through the use of cheaper overseas labor.
Companies often face a choice between offshoring parts of their businesses to foreign firms or using "captive" models, for which they set up their own operations and hire staff in another country. But according to the research by The Hackett Group, both practices bring the same cost-cutting benefits--even if the former tends to be faster and easier to implement initially. Captive programs, though, tend to produce more innovation and better customer service, because companies pick their own people and can more easily monitor them.
Source: CFO, http://www.cfo.com