OFFSHORING AND VALUE BASED MANAGEMENT

Abstract

Offshoring describes the relocation by a company of a business process from one country to another. It is defined as the movement of a business process done at a company in one country to the same or another company in another country. Having become comfortable with the services offered and starting to attain cost savings, many high-tech product companies started using countries like South Africa, India, China, Mexico, Russia, etc. for innovating products. At the beginning, companies moved offshore manufacturing, then the maturity and evolution of outsourcing strategies led to a shift towards the offshoring of business’ back office processes and IT. The next stage was offshoring of knowledge intensive business processes that require significant domain expertise. The important aspect analyzed in the article is the positive impact of offshoring on value creation and on key value drivers. The study presented argues that offshoring benefits are not limited to cost reduction. They go far beyond simple cost savings.