Motives and Challenges of Offshoring

Abstract Aim: The aim of this study is to explore offshoring in terms of different motives, challenges, advantages and disadvantages a company face. Method: Qualitative research method is adopted to conduct the study. The data was collected from interview questions from 11 personnel of M&F Associates with relative offshoring experience. Theories from peer-reviewed journal articles and relevant books were consulted throughout the study. Results and Conclusion: The findings suggest that major motives and advantages of offshoring strategy are cost efficiency. Contingency plan and development of consultants and services in home country also emerged as a major motive for companies to choose offshoring strategy. Further, the findings suggest challenges faced by the organization while implementing offshoring strategy like ‘language barrier’, ‘cultural differences’, ‘competency’ and setting deadlines. There are different challenges identified which are faced by an organization on continuous bases while implementing the offshoring strategy like ‘language barrier’, ‘cultural differences’, ‘competency’ and setting deadlines. Further, the finding suggests better margin is key for an organization and considered as a major advantage. As far as disadvantages go, the findings from the study reveal weak control and knowledge could be regarded as a disadvantage. This study also concludes that one of the evolving motives for organizations to adopt offshoring to make capacity for customer relations as well as organization face difficulty to communicate their offshoring strategy with its customers. Limitations: The study is based on the perspective of only one organization and with a limited number of interviews. Results of this study cannot be generalised. Suggestions for further research: Our recommendation for future study is to consider customer’s perspective on the issue. Both managerial perspective, as well as the customer's perspective should be taken into consideration for better result. Another suggestion, is to look into the relationship between offshoring and customer relation. Since, lack of studies been found in this area, further research can be explored for the benefit of organizations. A quantitative study with a wider selection of samples gathered from different parts of the world with specific industries could enrich the study even more. The contribution of the study: This study contributes to the general knowledge and understanding of why companies use offshoring strategy to expand business while discussing its motives, challenges, advantages, and disadvantages. Keywords: Offshoring, outsourcing, Uppsala model, customer relations