By Nigel Hilton
Outsourcing to an offshore company is part and parcel of how we do business nowadays, and outsourcing has yielded many positive results, but it’s also causing problems, as the recent story about Carillion has shown. But, for those who are in the manufacturing or factory industries, and they plan on moving their business to another country, or at least a part of it, what are the advantages and disadvantages that you need to be aware of, but also, what do you need to consider for your own business stability?
The Foreign Market
The foreign market in an overseas facility is a double-edged sword. It can help you to reach brand new markets, meaning you eliminate your immediate competition in your home country, but it also helps give a more comprehensive recognition of your brand. Brand awareness is vital now, and working overseas can help this no end.
Of course, moving part or all of your operation overseas means a lot of logistics that need to be figured out. If you are building a site from scratch, you need to consider the overall practicalities of the place itself. The sewage infrastructure and the cost of industrial water pumps, piping, as well as other essential amenities will be a significant cost upfront. But all these amenities are essential, so if you are heading to another country, there are these practicalities, but there’s also potential instability. Depending on the country, the political situation may be unpredictable, and this will have a direct impact on your success, especially if the economy is precarious.
The Potential Backlash
This is something that not many businesses consider, but if a company that is inherently American, for example, decides to open another branch in a foreign country, it’s not always met with resounding support. And if you choose to eliminate jobs native to your country to make the most of the cheaper labor overseas, this can result in a potential backlash, not just from your employees’ perspective, but the image of your business can be tarnished. This can have a direct impact on your clients, who could choose to work with a company 100% based in your country, meaning that when you calculate the real costs, you might have been better off staying at home.
For all of the risks involved in moving to another country, the costs can be an overwhelming positive. As many foreign countries have lower operating costs, this is something definitely worth taking advantage of. You could potentially save 50% on your outgoings. If your company is facing potential problems, especially when it comes to finances, this is a common sense approach.
Yes, this is something that is considerably popular, and it’s worth investigating, but lots of people choose to outsource or move to another country completely due to the highly competitive nature. So, does this mean that there will be as much competition overseas as in your current location? Think about it before embarking into new territories. It can very much be a lucrative option, but it isn’t always so lucrative.