In modern times, outsourcing and offshoring has become a very common feat in the business world as companies are stretching their resources to find new markets and explore cheaper and more efficient options to enhance their supply chains. However, there are a few pointers one must look into before deciding to offshore a company. Here are a few things to consider before moving operations.
Which region to move it to?
Starting a business in a different region is no easy feat and requires extensive research before doing so. As you would already know, there are various trade regions of the world which have in offer various attractive schemes for foreign nationals. Find out the regions which best facilitate your business model and also, which of the incentives and tax holidays would best facilitate your company.
For example, freezone company formation Dubai is different to company formation in Shenzhen, China. In Dubai there are various regions for IT, media, internet based companies as well as the investment companies and manufacturing companies. Shenzhen is more a trade city based on import and export of goods. There are also many other specialized trade regions along the Middle East and North African region also known as MENA, which offer a variety of economic and trade incentives for foreign nationals and corporations based on the various natural resources and labor forces at hand.
Moving away from the Local base
This is also a serious problem in offshoring companies. While the company needs to research on the economic policies of the new region, exiting an existing region or country may be a problem. Especially in the western countries, remuneration and redundancy payments can be very high. Also, shutting down and discarding of old machinery and factory equipment can be a very expensive exercise. There may even be legal issues to deal with when exiting a region and its policies and political influence when removing a few hundred or thousand jobs from a region. Certain towns have grown around companies and their factories in order to support the life system around these massive factories. Removing one of these factories would mean completely destroying the support system which has been built around it and reducing that town to a few old buildings. Especially in the desert regions which have no other support system. Thus, there is a humane aspect, along with the political, economic and regulatory aspects which need to be considered before removing an operation from a country and offshoring it, especially if you plan on continuing operations within and maintaining trade relationships with the parent country.