Offshoring to India – realising savings and capturing value

Abstract

PurposeThe paper aims to describe the drivers of offshoring to India and how savings and value can be generated by understanding and structuring the offshore journey as a lifecycle.Design/methodology/approachWhile offshoring is a contentious topic, more than 50 per cent of companies across the industries already offshore some of their functions. However, focussing on cost cutting alone can only lead to short‐term benefits while potentially putting at risk the mid‐ and long‐term position. Instead, successful offshoring is a multifaceted transformation, which includes industrialised approaches to service delivery. Levers for the business case not only comprise factor‐cost and effort savings, but also flexibility options and risk normalisation. An offshore delivery strategy can best be implemented by following a lifecycle approach ensuring stringent and informed governance decisions.FindingsThe paper finds that cost savings through offshoring are not only generated through factor cost savings, but increasingly through industrialisation and innovation engineering. To capture savings and value, corporations should actively manage the offshore lifecycle.Originality/valueValue creation through offshoring is neither inherent to the offshoring process nor to India as a target destination. Instead, a series of governance decisions in the offshore lifecycle lead to the desired result.