Offshoring Now Seen as Growth Driver, Not Just Cost Cutter

Duke/Archstone Consulting study finds corporations turning to offshoring for new product development, R&D and qualified personnel

Shift in Offshored Functions

China Rising

Importance of Buy-in

  • Disaster Recovery and Data Security As companies gain hands-on experience with offshoring, they are developing an appreciation for the business continuity risks in these locations, such as natural disasters and risks to data security. The number of survey participants who cited Disaster Recovery as a risk when considering whether or not to offshore grew to 43 percent from 26 percent in the first survey, while concerns about Data Security increased to 56 percent from 46 percent.

  • IT Still the Leader IT is still the leading offshore implementation for the majority of surveyed organizations (54 percent). However the fastest growing functions to be launched for new offshore implementations are administrative/back office functions, such as HR and finance/accounting with a 60 percent growth rate.

  • Corporate Culture Buy-in Still Critical Of the companies surveyed that are not offshoring, 78 percent point to corporate culture buy-in as the main reason; other top factors include employee morale (70 percent) and quality of service (74 percent).

  • Better than Expected Cost Savings Continued Similar to the first study, 78 percent of offshore implementations met or exceeded expected savings within the first year, with 30 percent achieving their service level goals within the first five months. When comparing Forbes 2000 with small and medium sized companies, Forbes 2000 companies achieved 37 percent savings while small and medium sized companies achieved 55 percent.

Additional Articles of Interest

increasingly global supply chains August/September 2004 issue Supply & Demand Chain Executive

global supply chain, with a focus on security issues Building the Secure Supply Chain iSource Business Supply & Demand Chain Executive