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Companies that offshore and focus on performance improvement actually save much more money than those motivated to offshore for cost reasons, a new study indicates.
Global management consulting firm A. T. Kearney conducted the study, called Execution is Everything: The Keys to Offshore Success.
The firm focused on 42 multinationals that have implemented offshore company programmes. It found that those who improved in at least three of the six operational performance areas studied experienced better rates of savings.
The six measures used were: capacity, organisational flexibility, revenue performance, organisational capability, process maturity and service levels.
The best performing group averaged 64 per cent savings - more than 3.5 times the savings of the offshore companies in the poorest performing group.
Arjun Sethi, vice president of A. T. Kearney and research leader, said: "The message clearly is to focus on improving performance and the cost savings will come as well.
"Placing too much emphasis on cost reduction serves to limit performance improvement. Winning companies are viewing off shoring in a holistic fashion and striving to achieve improvements across the entire organisation."
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