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Is a company likely to offshore   its activity? Copyright Factea Consulting Does the product or service require “face to f...
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Factea Offshoring Filter

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Is a company likely to offshore its activity?
Factea Filter: Offshoring Issue Analysis

Published in: Business, Education

Factea Offshoring Filter

  1. 1. Is a company likely to offshore its activity? Copyright Factea Consulting Does the product or service require “face to face” interaction with the customer? Are the customers indifferent to the product or service country origin? Do sufficient infrastructures exist in the offshoring targeted areas? Is the product or service easily duplicable in the offshoring targeted areas? Is the product or service free from significant regulation? Are offshoring costs lower than the difference between production cost in the consumption country and the production country? Does the company have sufficient resources to support the offshoring process? Do top management and shareholders have the will to offshore the activity? Will Resources Benefits Regulation Duplicability Infrastructure Origin sensitivity Proximity sensitivity 1 2 3 4 5 6 7 8 Industry Customer Company Yes / No (1) Factors Key questions Factea Filter (Offshoring Issue Analysis) <ul><li>Activity does not require physical presence of customers </li></ul><ul><li>Activity does not require deep knowledge about customer </li></ul><ul><li>Activity does not require cultural link with customer </li></ul><ul><li>Customers do not value the “made in” origin </li></ul><ul><li>Customers do not favor national consumption </li></ul><ul><li>Competitors produce in other countries </li></ul><ul><li>Activity is not related to customer security and health </li></ul><ul><li>Competitors operate in the offshoring targeted areas </li></ul><ul><li>Industry technologies are available in the targeted areas </li></ul><ul><li>Communication tools are developed in the targeted area </li></ul><ul><li>Activity is standardizable and repetitive </li></ul><ul><li>Work force is qualified enough for the concerned industry </li></ul><ul><li>Activity does not require deep technical knowledge </li></ul><ul><li>Activity efficiency is not impacted by cultural aspects </li></ul><ul><li>Activity is not subject to import/export restrictions </li></ul><ul><li>Activity is not within a national strategic industry </li></ul><ul><li>The targeted area participates in globalization </li></ul><ul><li>Company operates on highly competitive market </li></ul><ul><li>Activity is labor intensive </li></ul><ul><li>Costs of offshoring are lower than extra costs generated by this offshoring (training, follow-up, duties, etc.) </li></ul><ul><li>Transport costs are a limited element of the cost structure </li></ul><ul><li>Company is able to manage an offshoring project </li></ul><ul><li>Company is able to finance an offshoring project </li></ul><ul><li>Activity is not performing well and profit has been falling </li></ul><ul><li>Lack of paternalism of top management / shareholders </li></ul><ul><li>Company does not have a state shareholder </li></ul><ul><li>Shareholders are seeking maximum profitability </li></ul><ul><li>Activity does not imply risk of forgery / plagiarism </li></ul>Indicators of offshoring potential Source: Factea Consulting Research Note: (1) Answers: a company is likely to offshore its activity when all 8 answers to the Key questions are “yes”; a company is unlikely to offshore its activity when one answer to a Key question is “no” © ©

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