The complexity of the present-day business environment more often than not implies that the search for workable and scalable growth cannot be accomplished in-house. The resource and production facilities are unfortunately difficult to attain at one’s doorstep, as many might prefer. As choosing right business model and business plan are crucial, established entrepreneurs decide to look for a remote location to handle a part of or the entire process of manufacture. Three most popular business models that appear to interest most entrepreneurs are offshoring, near-shoring and on-shoring, and the following article outlines some of the basics of each business model in order to aid you in choosing the one that best suits the needs of your line of work. And I’m quite sure each business model and strategy is certainly going to help you to opt for your right direction.
Offshoring business model suggests that an entire business process relocates to a completely different location (as the word itself implies – offshore). There are many who believe that offshoring is limited only to the IT industry. Nevertheless, it has become a frequent practice of many businesses regardless of the niche they are in.
Everything from production, wages, research and other business processes can be completed at a lower price in some other countries around the world and for this reason Western countries usually opt for China, India or Philippines. Some of the setbacks of offshoring include language, cultural and time zone differences, what can have a negative effect on the quality of communication.
Similar to offshoring where company transfers its business process to a different location, near-shoring too implies relocation, however no further than its own region. The reason for moving also includes lower costs, but what makes it an attractive option is the fact that business is not affected by differing time zones or too contrasting cultural differences. Furthermore, by keeping the company business closer to its base, project manager is able to visit more often and have more control over the entire process, thus ensuring the higher quality of it. In the last decade it has become the most attractive option for software development, since it enables you to find a multitude of experts just by crossing the border of your own country.
What sets on-shoring apart from the above mentioned business models is the fact that the relocation is limited to the non-metropolitan areas in same country. On-shoring too represents the more affordable option, since businesses aim at country regions where costs of labor and operations are lower. Just like with near-shoring, time zone, culture and language barrier do not pose problems when you transfer to on-shoring business model, and managers can have greater control over the process of development or production. It also guarantees cost savings in regards to business travel.
When you are unable to find skills that are required domestically at a price that is conductive to a reasonable growth, you are provided with a three-way option: offshoring, near-shoring and on-shoring. Whereas Western countries still consider India and China attractive business locations, near-shoring is thriving in Europe. Irrespective of your geographical location, none of the three business models should be so easily disregarded.
I assume above given business model analysis for entrepreneurs is surely going to give you an idea. Please feel free to share your thoughts and suggestions via comments.