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| | The Middle East & Africa Business Network Network is not currently active and cannot accept new posts | | The Financial Crisis vs. Outsourcing | Views: 798 | | Dec 06, 2008 7:16 am | | The Financial Crisis vs. Outsourcing | # | 
Bjarne Innagle | | A financial crisis has turned into "The Financial Crisis". Few people had expected things would come to this only in the beginning of 2008.
There is no doubt, that the uncertainty about the length of the crisis, the uncertainty of retaining a sufficient cashflow, the uncertainty of "who will fall next", will spark some new tendencies in many company structures, both under and after the crisis: more off-shoring and more outsourcing.
Globalization was a hit before the crisis started, but with the opportunities it gives companies, we can expect it will accellerate to new levels even before the crisis is over.
Off-shoring is defined as relocating business processes to another country. The motive is most often to reduce costs.
Outsourcing is defined as relocating business processes to a subcontractor. The motives are traditionally plentiful. "The Financial Crisis" specifically motivates outsourcing because outsourcing is an effective way to convert fixed costs into variable costs.
Off-shoring and outsourcing often goes hand in hand, so a natural consequence of the financial crisis will be that US and European companies will dramatically increase the demand for IT and business services in the established off-shoring countries (India, China etc.). This is quite understandable, as in times of uncertainty, company directors will of course focus on keeping fixed costs low, to be able to react quickly.
Many companies are already involved in outsourcing today, and even more are in the preparing stage. A successful outsourcing can be founded even before starting outsourcing: Choose the right partner - and make sure your company internally is ready for outsourcing. These two points are valid both for the client and the supplier.
Fight the crisis by globalizing your business!
Bjarne
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