Offshoring.
The challenge.
You want to set up an overseas operation, but what is the right structure for your business?
The solutions.
Offshore outsourcing
Popular for IT development and other services using emerging and lower cost countries. An external supplier is selected and given complete responsibility for a project. This can work well for both short and long-term projects for small businesses but, if intellectual property rights are a concern, this approach can sometimes be high risk.
Joint venture
Setting up a joint venture with a local company overseas allows you to take advantage of their local knowledge and experience and reduces the risks of working in unfamiliar territory. The trick is finding the right partner and building trust. Be aware that it is normally far easier to start a relationship than end it.
Build-operate-transfer
Similar to a joint venture, this business model typically involves an offshore supplier operating a dedicated centre for your business. Once successfully established and certain conditions have been met, you can have the option to take over ownership and run it yourself.
Offshore captive
Increasingly common among companies looking to cut costs by setting up their own operations, ‘captives’ are usually a long-term option best suited to larger companies. However, captives can also work for small companies if they meet both long and short-term strategic objectives and there is sufficient funding and management expertise to set up offshore.