This document discusses factors to consider when making offshoring decisions. Offshoring can lower costs but companies must evaluate their unique needs, such as worker skills, connectivity, and business environment. When many companies move to one location, it can overheat the labor market and strain infrastructure. The right offshoring decision requires assessing costs, skills availability, business environment, market potential, risks, and infrastructure quality. Companies should not just follow others but make choices based on their own business needs.

1. Group members
•Zarlish Qazi
•Wajeeha Pervez
•Nida Alam
By DIANA FARRELBy DIANA FARREL

2. Off shoring means
getting work done in a
different country.
Benefits of off shoring are
usually lower costs, better
availability of skilled
people, and getting work
done faster through a
global talent pool.

3. NO DOUBT REGARDING
AVAILABILITY OF
VAST TALENT POOL, &
OTHER BENEFITS
BUT..
POPULARITY HAS ITS
COST….

4. Its not very much comfortable for companies to locate off shore
operations, specially for those who are experiencing it first time.
They must need to evaluate their unique business needs such as:
1. Skill level of workers
2. Connectivity
3. business environment

5. Some companies do not consider their unique
need and follow what others doing.
Even some companies use a narrow set of
decision criteria they only consider”
labor cost
time zone
and creature comforts

6. To make the right choice among increasing
number of possible locations one must consider
the other factors as we such as:
Wage inflation trends
Future labor supply
And recruitment cost.

8. According to this article general electrics and British airways take the step of
moving and after watching this other companies also step up.
It increase the opportunities of market expansion, availability of low
wage labors etc but on the other hand it has some black points to
consider such as:
When too many companies pile in to one city or country it overheated its
labor market, and its not possible for the targeted country to expend its
infrastructure according to the demand as fast enough.
For example:
Gurgaun which attracted so many companies like nokia, Microsoft, fidelity
investment. So many shopping malls has construct and some are under
process.
But Gurgaon’s paralyzing traffic conditions, power outages and
communication black outs make it difficult for residents to live comfortably.

9. BYOND THE HOTSPOT
Study of 28 low wage countries by MGI
1. 6.4million professionals in 2003
2. The percentage of suitable professionals
varies
3. Projected demand in 2008 will increase by 98
and 78%
4. Developing countries filling the gap.

10. How to make the right off shoring
decision?
To make the right off shoring decision companies should
assemble detailed information on a number of factors:
1: COST:
Labor,
Infrastructure,
real estate
corporate taxes,
2: availability of skills
skill pool
size of offshore sector
vendor landscape

11. 3: ENVIRONMENT
govt support
business environment
living environment
accessibility
4: Market potential
attractiveness of local market
access to nearby markets
5: Risk profile
disruptive events
security
regulatory risk
macro economic risk
intellectual property risk

12. 6: QUALITY OF INFRACTURE
Telecom and IT
real estate
transportation
power

13. • Emerging New Candidates
 Beyond the hot spots where the managers are finding ways to set up
employees from under develop areas to majors cities. They are using these
tactics and they differentiate on the bases low wages and housing loans to
improve the standard
 They studied that the companies are focusing on the standard of living in
different countries as they state setting up operations in India is much
lesser as compared to South Africa but India is not competitive on the bases
of infrastructures that’s is why companies like Amazon. COM and IBM are
still interested in South Africa.
• Navigating the Global Labor Market:
 companies establishing their first captive offshore operation have to
consider the fact that they should emerge in such a country where they
know the regulation or on the bases of low wages
 company that already has an extensive global network of captive operations
may understandably feel justified in locating a new operation somewhere it
already knows, without further analysis. Using existing management
resources, infrastructure, and government connections in a familiar place
obviously lessens the risk of any new venture overseas. But the familiar may
not necessarily be best for the business.
THE INHERENT “STICKINESS” OF ESTABLISHED
OFFSHORE LOCATIONS MAKES IT CRUCIAL TO CHOOSE
THE RIGHT ONE THE FIRST TIME.

14. COMPARING LOCATIONS OBJECTIVELY:
 Draw up a long list of possible locations.
 Define decision criteria
 Collect data for potential location
 Give more weight to the criteria matter most to your company
 Rank locations
 Access the dynamics of labor pools

15. BASING OFF SHORE
DECISION ON UNIQUE
BUSINESS NEEDS WILL
LEAD DIFFERENT
COMPANIES TO MAKE
DIFFETENT CHOICES.

16. As concluded from this article and presentation it is
understood that there is no doubt about the benefits of
off shoring but no one can neglect this fact as well that
off shoring is not a puppet game. It requires a
considerable analysis of business unique needs,
factors that must be focused to select location
because this is not just as simple to select a location
by taking wages or cost benefits as the main
consideration because there are many other factors
that should be focus to start off shore operations.
Off shore is not enough but smarter off
shore is necessary.