Entrepreneurs’ Toolkit: Offshoring
By Guy Rigby, Head of Entrepreneurs, Smith & Williamson
You want to set up an overseas operation, but what is the right structure for your business?
Popular for IT development and other services using India and other 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.
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.
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.
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. But 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.
Finally, there are specialist service providers, such as Quickstart Global that help businesses set up their operations offshore. Often appropriate for smaller, growing businesses, the service provider can help with many aspects of working in another country, such as recruitment, premises, infrastructure, IT and dealing with the local authorities.... continued on page two >