Alternative Offshore Outsourcing Structures

In these troubled times, offshore outsourcing retains an allure for businesses. There are still significant savings to be attained from leveraging the benefits of lower offshore operating costs. But offshoring still comes with risks attached and neither of the two main approaches - full outsourcing to a local provider, or wholly-owned captive entity - is seen as a universal panacea. So, increasingly, companies are looking for smarter ways to access the offshore market while mitigating risks.

Risk mitigation comes in many forms, but it can start with the earliest, most basic decisions in an outsourcing process: that is, how to structure an offshore relationship to reduce risk. This article looks at some of the main alternative offshore outsourcing structures - from virtual captive, to joint venture, to "build-operate-transfer" models - and assesses how they compare in terms of benefits, flexibility and long-term operational suitability.