Offshoring, the increasingly common practice among U.S. and European companies of migrating business processes overseas to India, the Philippines, Ireland, China and elsewhere, is often seen as a negative phenomenon that suppresses domestic job markets. On the contrary, says the author, offshoring is a critical component of next-generation business design, a dynamic process of continually identifying how to deliver superior value to customers and shareholders. Companies such as General Electric, Intel, J.P. Morgan Chase, Allstate, Prudential, Dell, Cisco and Motorola have all adopted it in some form as they shift their managerial frames of reference toward the requirements of the global-network era. Companies would do well, the author advises, to think rationally — not emotionally — about offshoring’s relevant issues: What are their core competencies? What form of governance is optimal? How will work will be distributed and integrated?
N. Venkat Venkatraman is the David J. McGrath Jr. Professor of Management at the Boston University School of Management. Contact him at venkat@bu.edu.
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