Offshore Development

We all heard of companies that are present in more countries. These are mostly larger companies, with a larger business, or even smaller companies, having a small but very well going business meant to be spread to other countries too. Normally, these companies all need a professional management. As they penetrate more and more countries, they must be very careful. Customers worldwide have different needs. You can’t expect the same customer needs in the United States of America and China. Simply people are different, life style is different, that is why customer needs are also different. Also you may find it hard to open 2-3 more stores in the United States, but extremely easy to open even 30 stores in China. Why? Prices are also different, labor force is also different. Emerging economy countries have cheaper labor force.

What is the main idea of offshore development? First of all, offshore development isn’t at all like outsource development. Outsourcing and offshoring are commonly mixed up by people, they don’t realize how different these trends are. Outsourcing always involves a third-party company or individual to provide the required services or products, and may have a little offshoring involved. Offshoring has no third-party company involved. Offshoring is only like transferring some part of the business from a country to another, but keeping it within the same corporation or company.

Let’s take a simple example. You are a shoe manufacturer. You have several stores in Mexico, Canada, United Kingdom, Russia, China, United States of America and Germany. You will probably consider a lot of offshore development. Why? You need to produce lots of shoes, and sell them as cheap as possible. Most probably production costs in Germany or the United States are very high. This is when offshore development is considered. You will transfer the shoe development and manufacturing to China. You will use your employees to manufacture your shoes there, then have them shipped back to the other countries. This way you used your own power, your own labor force within your own company, still you offshored your development.

Offshore development is a relatively new business trend, it is widely known and used, being very profitable for most of the companies out there. The goal of offshore development is similar to the goal of outsource development. You save your time, money and energy in order to focus on the essence of your business, making it possible to think about further developments and investments.