Inspirational Examples Of Offshoring Companies: 15 Successful & 5 Failed Companies

The way we work is also adapting to the evolution of technology. Companies in the past have been restricted from hiring workers in their local market, making it hard for them to expand and scale up development teams.

But the advent of offshoring has made it possible for start-ups to set up virtual software development centers worldwide, and they can hire specific talents from all over the world. That opened a whole new world of possibilities for companies, enabling them to access top talent more quickly and build their development teams at an affordable cost.

In this post, you will walk through several examples of offshoring companies and learn more about their motivation, benefits, and challenges. Let’s look at the fascinating world of offshoring and learn from these real-life examples.

Offshore Companies Definition

An offshore company is a company that is registered or incorporated in a country other than the country in which it is primarily engaged in its activities or has its headquarters. These companies are normally established in jurisdictions that provide favorable tax and regulatory conditions, known as offshore financial centers or tax havens.

In the technology sector, offshoring, or the use of developers from another country than the one where your company is located, is becoming more and more common. Hiring software developers from outside of the country, creating an offshore dedicated team, or establishing a remote technology center are some of the most common examples in tech.

The creation of an offshore company is primarily motivated by the benefits provided for it under the chosen jurisdiction. The benefits could include taxation advantages, financial transparency, asset protection, reduced bureaucracy, flexible corporate structures, and access to global markets. Offshoring companies are commonly used for various purposes, such as foreign trade, investment holding, asset security, wealth management, IP rights, and confidentiality.

15 Inspirational Success Examples Of Offshoring Companies

Offshoring has been used to scale up and increase profitability by popular companies from different sectors. Let’s start by looking at the journeys of some of these giants and their offshoring:

1. IBM

The largest technology corporation in the world, International Business Machines Corporation (IBM), is well known for its vast outsourcing efforts. With many offshore development centers that provide software development, IT support, and customer service, IBM has a substantial presence in India. 

It has leveraged a pool of talent and cost advantages in India to provide its customers with the highest service quality while maintaining IBM’s competitiveness in the world market.

2. Accenture

Accenture, one of the world’s largest management consulting and professional services companies, has adopted offshoring as a key strategy. The company has been setting up service centers in countries such as India, the Philippines, and Romania, where skilled workers provide various services like software development, outsourcing of processes, or IT consulting. 

With these offshore centers, Accenture has increased its capacity, reduced costs, and accelerated the delivery of projects to its clients.

3. Apple Inc.

Although Apple is the world’s most famous company for its designs and innovative prowess, it also outsources some production operations. For example, companies such as Foxconn produce a large share of Apple’s production in China.

This offshoring enables Apple to take advantage of China’s vast manufacturing capacity, skilled labor force, and supply chain infrastructure, contributing to the company’s ability to meet global demand and maintain competitive prices.

4. Tata Consultancy Services (TCS)

India’s Tata Consultancy Services, an international IT services and consultancy firm, is a major player in the offshore outsourcing sector. Tata Consultancy Services offers a variety of services to customers all over the world, including application development, infrastructure support, and business process outsourcing. 

TCS has become a preferred partner for the offshoring of IT and business processes because of its large pool of talented experts, as well as an extensive global delivery model.

5. General Electric (GE)

In the context of its global business strategy, General Electric, a multinational conglomerate, is leveraging offshoring. In countries such as India and China, GE has set up research and development centers where engineers and scientists work on inventive projects, develop new products, or make technical progress. 

General Electric was able to speed up innovation, shorten the time it takes to market and keep pace with competitors by taking advantage of its expertise and cost advantages in such offshore locations.

6. WhatsApp

Their reliance on offshore talent has been one of the keys to WhatsApp’s success. The company has hired development teams in Eastern Europe to help it achieve top rankings in Google Play, App Store, and other platforms. As a result of its offshoring strategy, WhatsApp grew at an incredible rate and became one of Facebook’s most valuable assets. 

In keeping their backstage, providing design solutions and developing applications while relying on WhatsApp’s core team of engineers focused on client matters like customer support, the company has also relied on offshore talent. It was the biggest acquisition of a company that financed itself with venture capital by then.

7. Google

Google is a multinational company in the technology field, providing Internet services such as search engines, cloud computing, etc. The acquisition of this business demonstrates that even if you have the biggest team of developers in the world, there is always room for growth and innovation. 

This offshoring solution proves that there are not enough large companies to do everything independently. They can also maintain the viability and relevance of their business by using contractors’ experience and creativity. 

8. Amazon

Amazon.com, Inc. is a multinational American technology company based in the US focusing on e-commerce, digital streaming, and AI (Artificial Intelligence). Amazon chose South Africa for its call center services since it is home to numerous highly qualified outsourcing businesses for customer support. 

In addition, in 2018, the company opened an outsourcing base for customer services in Cebu, Philippines. Apart from customer support, Amazon also outsourced Research & Development (R&D) to a Ukrainian start-up specializing in developing home security systems. Amazon can obtain extraordinary talent from offshoring R&D at a reasonable cost of employment.

9. Wise (formerly Transferwise)

Wise is a Financial Technologies Company in London that allows customers to transfer money online from various parts of the country. The organization’s development has been offshored to talented professionals worldwide. 

It also has a remote development team primarily located in Estonia and Ukraine. Some developers, who had been with this company since the beginning, also took up a place in the core team.

10. BigCommerce

BigCommerce is an online marketplace in the United States where entrepreneurs can set up their own Internet shops and sell products. Due to the absence of IT experts, BigCommerce could not expand at this stage in its development. So they outsourced their information technology tasks to an overseas company in Eastern Europe, Ukraine. 

In addition, it outsources its tasks to talented candidates or companies from other countries, such as data entry, accounting, research, development, etc.

11. Ford Motor Company

An American company that produces automobiles is called Ford Motor Company. Ford has shifted manufacturing to China in view of the high demand for its vehicles and increased production costs on the domestic market. 

In Mexico, the company is also involved in offshore production. In addition, it outsourced its back office, software development, and customer support to India and other countries. There are, however, several factories in Thailand, Brazil, France, China, and other countries where operations can be successfully carried out at a lower cost.

12. People.ai

People.ai is a company that offers a B2B sales acceleration platform using machine learning technology. The company has its office in San Francisco but intends to set up a research and development (R&D) base in Ukraine to find offshore artificial intelligence (AI) developers. 

Today, People.ai has access to a highly skilled community of developers that could help develop innovative products and improve what is already in place. Moreover, the company can provide its customers with a more competitive product because of reduced operating costs incurred by running an offshore technological office within Ukraine.

13. Lyft

Lyft is one of the most significant examples of companies that provide offshore IT services. This ride-sharing business established in the US focuses on developing technologies that give customers an unmatched experience. Lyft therefore decided to set up its software team in the region to take product development to an even higher level and strengthen its technology community in Eastern Europe. 

Since its launch in 2021, the company’s workforce has grown to 20 programmers and is expected to increase to 100. Their software developers in Eastern Europe focus on data mapping and improving Lyft’s services.

14. ThredUP

ThredUP, an online resale platform, has decided to establish a software R&D office in Ukraine. They knew they could find a pool of talented tech experts in this country, but there was no disappointment. 

These days, its offshore workforce comprises Java programmers and hard-to-find machine learning experts. Payroll and accounting activities, as well as Net Warehouse developers. 

The outcomes were impressive: in 2019, they became the largest consignment retailer in the world and raised $168 million in funding from the IPO. The ThredUP revolution is already underway in the fashion industry.

15. Samsung

As a South Korean multinational company, Samsung Electronics Co., Ltd. makes electronic and intelligent appliances. The manufacturer was exporting production to countries like the United States, which is a major consumer of its products. In 2005, it made an investment in its Austin Semiconductor factory of $500 million. 

In addition, the company has set up a new production plant in India exclusively to produce smartphones. In addition, it has transferred customer support to the Philippines for Australian Samsung mobile users.

5 Examples Of Offshoring Companies Failed

While many benefits can be achieved through offshoring, its challenges and risks are also present. Some examples of offshoring companies that have suffered difficulties or failures in their efforts to set up abroad are given below:

1. Nike

In the 1990s, as reports of poor working conditions and labor abuse at its offshore manufacturing plants came to light, Nike found itself under significant pressure. 

It has been criticized for its reliance on low-wage labor in countries such as China, Vietnam, and Indonesia. The debate has damaged the reputation of Nike, with protests and calls for better working conditions.

2. Mattel

In 2007 Mattel, the world’s biggest toy producer, was dealt a major blow when millions of toys were recalled due to safety concerns. High levels of lead paint and small, dangerous magnets have been found in the toys. 

Problems with the production in China, where much of its manufacturing has been outsourced by Mattel, were at the heart of the recall. This incident has shown the quality control and oversight challenges at offshore production.

3. Dell

Dell, a major computer manufacturer, faced customer dissatisfaction and a drop in sales in the early 2000s due to customer service problems related to its offshoring strategy. 

The company has transferred its operations in customer support to call centers in India and the Philippines. However, dissatisfied customers and the negative effect on Dell’s brand image were driven by language barriers, cultural differences, and customer service inefficiencies.

4. General Motors (GM)

In the early 2000s, General Motors, one of the world’s leading automotive companies, had encountered difficulties in its offshoring strategy. Some IT operations have been outsourced to an offshore service provider in India. 

The company has suffered delays, quality problems, and increased costs due to the lack of communication and coordination with its offshoring partner and GM’s engineering teams. Eventually, these problems led GM to regain some of its IT operations under its control.

5. British Airways

British Airways (BA) had a significant disruption in 2017 when an IT outage resulted in aircraft cancellations and delays that affected thousands of passengers worldwide. 

The malfunction was caused by an outsourcing decision for certain IT functions to a service provider in India. This incident has highlighted the need for a robust IT infrastructure and efficient coordination in Offshoring arrangements.

Lessons-Learnt From Examples of Offshoring Companies That Failed

The examples of offshoring companies that succeeded and failed have been mentioned above and also show you how difficult to manage your in-house team as well as the offshore team. 

However, there are several ways in which this transition can be made easier:

Get Started With A Small Team

If you have a large team, it can be challenging to manage them offshore, especially if you don’t have any offshore experience. 

It is better to start offshoring with a small team, which can be more easily guided. Once the business needs have been fulfilled, you can add more of your offshore team.

Train Offshore Workers

Your offshore team might not be familiar with your brands, customers, or business practices, which can reduce their effectiveness and affect the result. You could train your offshore team before they start working to prevent this. 

Make sure these people are familiar with their responsibilities, talk about the objectives and work out a plan. You can help them adapt to your company in that way.

Use The Right Software

Suitable software can make it easier to overcome the challenge of outsourcing by streamlining communication, managing projects, storing information in the cloud, handling payrolls automatically, etc.

Choose An Appropriate Location

It is crucial that the right country or region be chosen when a company decides to move its activities offshore. Consideration should also be given to a number of factors, including labor costs and infrastructure. 

If one of these factors is out of line, this can lead to problems in the future. For instance, you may stop employing a whole team if your labor costs are high. 

It may be hard for your developers to work on code in real-time if you don’t have the infrastructure. To this end, all factors must be considered by undertakings before determining where to recruit for offshore employment.

Manage Communication

The problem of maintaining access to communications between employees in different time zones is one of the greatest challenges faced by offshoring. This can result in miscommunication and delays, which will eventually harm the quality of products or services offered. 

Moreover, if employees are not sensitive to cultural differences between their culture and the culture of their offshore staff, offshoring may also lead to cultural misunderstandings.

Manage Business Processes

If a company outsources its software development to another country, it may lose a certain degree of control over the process without any safeguards in place. Delays and mistakes in the development process may result from this. 

In addition, the company can’t obtain identical technical expertise in-house when managing projects and ensuring that they are properly developed. In this way, a lack of control over software developers could lead to the failure of the offshoring process.

Conclusion

Offshoring operations is an important step for any company and requires careful consideration and planning. The examples of offshoring companies set out below provide a glimpse into various companies that have chosen to adopt outsourcing as a business strategy.

In doing so, you must consider when and where offshore business is conducted and how to exploit it economically. To this end, you can learn from companies that have used the offshore model to grow their businesses. The additional tips mentioned in this post about successful offshoring cases can be found.

In particular, it is important to remember that the challenges inherent in offshoring, such as intercultural differences, time zone management issues, and data security concerns, are also present. However, offshore can be an important strategy with careful planning and efficient implementation for companies that want to succeed in a global business landscape.