Organizations the world over are under pressure to provide their customers with ever higher standards of value, and to keep up with the accomplishments of their competition. In today’s global economy, this global-level performance pressure is greater than ever. The main contributing factor to this trend is in the benefits associated with off-shoring production operations.
Many new changes to global trade laws have reduced the cost of manufacturing goods and producing services using the offshore model. This model has been implemented in many forms which have been refined over time.
Before listing the benefits of relocating production centers offshore, it should be said that there is a cost to be paid in order to reap the benefits of this model. That cost is cutting jobs, and phasing out products and service that do not perform as well. It can result in a kind of burning of bridges as communities of workers will have to be made redundant. Organizations that adjust smoothly and succeed in crossing the divide to an offshore business model can expect to outperform those who do not.
Off-shoring can take place in one of two ways: either by outsourcing through partnered vendors or through in-house off-shoring. With outsourcing, the work is completed at a partnered facility using the partner’s resources. With the in-house method, a US firm independently establishes itself overseas.
There are numerous benefits to be gained from locating production outside of the US. The benefits include, but are not limited to;
Reduced costs – Lower costs of labor, purchasing, and taxes
Time zone advantages – Innovative use of time zone differences can result in ’round the clock advantages
Selecting regions with fewer regulations – eliminating compliance costs & limitations
The nature of off-shoring comes with its own advantages by helping the company expand its scope, allowing your organization to grow. This growth may compensate you for any undesirable effects that will come from off-shoring your means of production.