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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.
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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. and started growing tea in India, 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.

http://www.fnstar.com

Bipin Agarwal
https://servicesglocalization.wordpress.com/about/

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IT offshoring – How small and mid size firm can be successful June 7, 2008

Posted by Bipin Agarwal in IT Offshoring - Future Direction.
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There are lot of small and mid size IT firms every where. On a revenue basis these are firms from 1M to 200M dollar in revenue or have 50 to 5000 people. When country such as India and others are primarily focused on exporting their services, it is critical that these firms can differentiate and focus their effort on a well defined market in order to be successful. This is even more important if there is a desire to have a business risk management or an exit strategy.

How do small company stay relevant in the long run? There are couple of options, one – join the party with the large company by selling some portion of the company, in return you get access to their HR, Legal, finance, marketing, operational processes, and sales network. Two – merge with another small company to focus on at least two or three niche market. Three – rapidly expend in the niche market to become the dominant player.

Given the uncertainty in the global economic environment, technology innovation, at this time I am more inclined to be a seller of the small and mid size company.

http://www.fnstar.com

Bipin Agarwal
https://servicesglocalization.wordpress.com/about/