Category Archives: Outsourcing
Tips On Deciding To Offshore Or Outsource Operations
Businesses are made up of both benefits and risks, and offshoring outsource operations is not an exception. Caution is needed in acquiring outsourced services, and there is even a much greater risk in delving into offshore captive centers for your company. Before diving straight into action in getting offshored services, you might want to spend more time thinking on it again.
Choosing Between Setting Up an Offshore Captive Center and Outsourcing Services
Remember that there is a difference between setting up a captive center and acquiring outsourcing services. Having your own offshore captive center would require you to spend lots of time and money to build and set it up. This is also a strategy that is meant to be for long-term operations. If what you require, however, are services that will not be taking a long time to complete, such as creating a program or software for your company, then it is greatly recommended that you just get the services of an outsourcing personnel. There are pros and cons to both of these strategies. Be aware of them and think clearly which one will best serve your business.
Make Sure You Have Disaster-Recovery and Backup Plans
It’s always better to be safe than sorry. That’s why whenever you venture into something new in business, it’s always recommended to have a backup plan. Of course, there will still be risks in business. But if there is a chance that you can minimize mistakes and avoid any future disasters, then do so. Fortuitous and unstoppable events like natural disasters are also not unheard of to affect businesses when they happen. Storms, flooding, earthquakes and other natural calamities should be prepared for. This is especially true when your offshore captive center will be set up in the Asia-Pacific region where typhoons and natural disasters have been known to occur.
How the Offshore Captive Centers Are Still Standing
Some predicted that the offshore captive centers would slow down and eventually die out. These business ventures were only good for a short period of time, and would be dumped after a while. They were wrong, however, as we can see that captive centers and outsourcing companies are still alive and growing today. There are more than 500 captive centers in India itself. Add to this the other countries that are competing in this business sector, we can imagine just how much offshoring and outsourcing have grown.
The reality is that when the others have observed as the offshore captive centers dying, there is actually just an evolution going on. Offshoring and outsourcing evolved. Strategies and expansion has allowed this to be so, and as a result this industry is actually even bigger now than it was years ago. Most captive centers created years ago are still operating and have expanded their services. There are also new captive centers cropping up to join and compete with the others. And as word of the success of the captive centers spread some more, more and more of them will enter the market and more businesses will be out to invest in them.
There are two main reasons why offshore captive centers will not fade away into history just yet. For one, captive centers are already a large and established part of the industry. A sector that has contributed a great deal to a country’s economy and has benefited a foreign company is not just going to be set aside. Another reason for the continuing presence of offshoring and outsourcing is because the captive centers have expanded their services to more than what they normally give. When once a captive center was only expected to provide customer help, now captive centers provide a variety of IT solutions and virtual assistance.
Offshore Captive Centers Still Popular
Multinational companies and big time businesses from America and Europe are still looking to offshore captive centers for IT services and solutions. Setting up these subsidiaries usually provide the companies a more cost-effective way in expanding their operations. It provides the companies with the services that they require while also getting big savings from the low cost of labor and rates in the captive center’s country.
Time was the offshore captive centers were just for less expensive non-tech support, such as customer service representation and online marketing. But more jobs and services were seen to be sufficient enough to be relegated for the captive centers to take care of instead of the parent company. This move meant that the company can focus more on their core jobs while the captive centers would take care of the support jobs. These jobs included virtual assistance, website maintenance, online marketing, programming, and other IT-related tasks. Most captive centers today have staffing that specialize in computer and information technology, and are hired to work on IT-related issues. Now offshore captive centers are not all about assistance and customer support. They have expanded to providing companies and clients IT services and solutions.
The parent companies of the offshore captive centers also found their expansion to their benefit. In regulating more jobs to the captive centers, not only can the parent company focus on their main jobs at the core center of the business, they also save more money and more time. The staffing of the captive centers have lower labor costs and expenses and so the parent company can guarantee themselves huge savings. And they’ll be able to have more time in focusing on doing their jobs with the captive centers taking over the support jobs. It really is a win-win situation for both sides.
Tips On Setting Up and Managing Your Offshore Captive Center
So you and your company decided to put up an offshore captive center in another country. The research that led to this proposal (that led to its approval) would have told you that you will have to exert more effort and put in more time in order to properly manage you captive center. Here are a couple of tips that can help:
Be Patient In Setting Up Your Offshore Captive Center
With less costs and big savings as a purpose for companies to set up their own captive centers, it sometimes flies out of their minds that setting up a captive still needs sufficient resources (including financial resources) and time to be finally completed. One thing that every businessman should bear in mind always is that if you do not want to waste any more time and any more money on expanding your business, you better do it right. And in order to do it right, you shouldn’t hurry the processes in building your offshore captive center.
Participate Actively In the Negotiations
Legal counsel in the negotiations for your offshoring venture is important. But so is your participation as the owner and leader of the negotiations. As the leader in the offshoring project, it should be you who should lead the negotiations, and the lawyers and the advisory team should stand by as support. If you want your offshoring project to proceed as smoothly and as speedily as possible, it’s better to participate in the negotiations and the processes as much as possible.
Outsourcing Centers in Asian Countries
Asia has long been a favorite for destinations for offshoring and outsourcing centers. Among the many countries in the continent, four countries have made their mark in the business of offshore and outsourcing staffing.
India: India is in the lead when it comes to offshore services and outsourcing centers in Asia. The country has established itself strong in both IT and non-IT outsourcing areas, and also has an attractive rate in scale and cost of labor. It has a very large pool of labor and manpower, and the employees are trained to meet the demands of a market bent on technology and telecommunications. Foreign investors looking to set up an outsourcing center in India will only have to expect infrastructure problems and inadequate local and international connectivity. There is also the issue of privacy and security laws, as India lacks breach notification requirements and privacy legislation that equal that of the laws of U.S.
China: China is not likely be left out in this business of outsourcing centers. The country is proving to be competitive, too. Its labor size and costs is competitive relative to other offshoring destinations. There is the problem of language barriers, however, and sometimes investors have to pay a premium to get hold of personnel with English-language capabilities. There is a lack of English fluency in the country that makes it difficult for Americans to conduct their business. Other problems that foreigners have to contend with in setting up outsourcing centers in China are the country’s copyright laws and intellectual property rights regarding IT software, and the inner-country competition (wherein you cannot trust what one province has to say about another province because most probably they are just badmouthing each other).
