Taking offshoring beyond labor cost savings

Most executives know by now that labor cost savings are only part of the potential gain from offshoring, but relatively few are acting on that knowledge.
Examples from leading-edge companies include an airline that employs more staff to make sure it is getting full compensation for tickets and an insurance firm that reengineered its back-office operations for substantial savings.
Offshore companies are beginning to address these new opportunities. Executives who move quickly stand to make the biggest gains.

Exhibit 1: Companies typically adopt cost-saving measures first, then seek other gains.
Exhibit 2: Offshoring should be thought of as only a part of the operating-model redesign.

It’s hard for brand managers to keep pace with the shifting attitudes of Chinese consumers. But some trends can be discerned amid the noise.

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