Anna Frazzetto's Blog

Digital Innovations and Technology Solutions

Beyond Cost Considerations: An Intellectual Look at Offshore Opportunity

According to the latest A.T. Kearney Global Services Location Index, labor cost advantages should not be the deciding factor in choosing an offshore provider or location. While A.T. Kearney predicts that wages in offshore locations will remain lower "for the foreseeable future," they are starting to rise.

What is also on the rise is the competition for offshore business. More and more countries in Eastern Europe, the Middle East, Asia and South America are entering the offshoring game. They are also greatly increasing the pressure on China and India (still today's top offshoring powerhouses) to provide the best service and talent or miss out. That means smaller countries are working hard to find an edge and one of the biggest opportunities for competitive advantage, in my opinion, is intellectual property (IP) protection.

In offshoring today, a business cannot be careful enough when it comes to their IP. They need to be sure that their technologies and information will be safely guarded and well protected by their offshore provider as well as by the offshore provider's government.

As we all know from the business news, IP protection has proved more than challenging in China. On the other hand, new entrants into the offshoring are working hard to ensure strong regulatory protections for the businesses they serve. Their governments, eager to see their economies benefit from global business opportunities, are building enforceable regulations that would protect corporations who send offshoring business to their shores.

While there are many areas to create competitive business advantage in offshoring (talent, experience, geography), I believe it is countries that succeed in building safe havens for business ideas and innovations that will successfully siphon significant offshore opportunities from leaders like China and India.