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Oshoring versus not oshoring
The offshoring industry has globalization to thank for a rapid growth. During the early 50s and
60s all the major corporations wanted to expand their market and continue growing at a rapid
pace. As a result of this, they started diversifying into other non-core areas of their business to
appease shareholders and bring in more revenue and profits.
By late 70s and early 80s corporations started realizing that to sustain the profit levels they had
to further widen their net and started building manufacturing and other down-stream capabilities
offshore. This went for another decade before offshoring became a critical business strategy for
MNC’s. But it was different this time, corporations started offshoring non-core downstream
activities to countries with adequate resources and cheaper wages to support organization wide
cost saving measures.
The initial offshoring activities resolved around supporting core-business activities (company
owned IT support / call centers), which I believe is the right way to run a business as you don’t
want to waste your resources to support activities which do not contribute to your organizations
bottom line. But this is a slippery slope and as we have seen the direction that American and
European corporations took – i.e. offshoring activities which add value to their business and are
profit centers. Offshoring core business functions may bring in more profits in short-term but it is
detrimental to internal long-term growth.
As companies start offshoring their core business services they start ignoring in-house talent
development and after a while their workforce will neither have the knowledge, nor the skillset
necessary to render those services. The best example of this is the IT Hardware industry in
America, they started with being the innovators and leaders of the industry but ended up
offshoring everything from production to design and to finally R&D. Now, companies even if
