Outsourcing, Offshoring, and Innovation

Three techniques for accessing strategic resources and talent on a worldwide basis are outsourcing, offshoring, and innovation. Offshoring is the process of manufacturing in foreign locations of strategic significance. It can enable global organizations to create strategic centers for providing services in locations where there is significant cost advantage. The strategy of outsourcing white collar jobs to foreign locations in an attempt to reduce overall costs is a regular practice for large global organizations. Offshore outsourcing enhances global competitiveness by enabling small- and medium-scale enterprises to reduce costs, expand relational ties, serve customers, free up scarce resources, and leverage the capacities of joint venture and strategic alliance partners. Given that these strategies are increasingly common, the chapter devotes a significant amount of attention to their discussion. The technique of innovation for improving products and services on an ongoing basis is discussed, with attention to the factors that foster innovation.