Back Office Activities: Offshore or not offshore?

For most large firms today, offshoring is high on the strategic agenda. Most have been through several waves of changes in the way their support activities are managed – from the development of shared service centres, to outsourcing arrangements, to automation initiatives. Offshoring – the relocation of certain activities to foreign locations, often thousands of miles away – has existed as an option since the 1980s at least, but it is only in the last five years that it has moved from being a niche strategy, adopted by a few early-movers, to one being considered by the majority of firms. A recent survey1 of 275 finance executives at multinationals, found that 18 percent currently use offshore outsourcing, with many more considering this option in years ahead. The business headlines suggest that offshoring is about moving IT and call centre jobs to India for the sake of cost reduction. But the reality is far more complex on many dimensions. Offshoring is being undertaken in a range of functions, from IT, finance and accounting through to business analysis and R&D. Location choices range from “nearshoring ” in countries such as Poland an