Offshoring is the utilization of services from any foreign subsidiary for a service formerly produced locally within the company. This is the strategy being utilized by multi-national EPCM companies to remain competitive in the market.
Rather than using local labor to bid on projects, these companies are using the cost of labor of their subsidiaries in cheap labor countries. Any company which does not use offshoring will have its cost sky rocketing, losing the chance to win a project.
| Company | Offshoring Location |
|---|---|
| Bechtel | India |
| Fluor Daniel | Philippines |
| Jacobs | India |
| KBR | Indonesia |
| WorleyParsons | China |
Offshoring is not only used for bidding. It is also used to fast track or reduce the cost of existing projects. Fast track as the offshoring locations have more personnel to do a single job and reduce cost as the ratio between local and offshore cost is almost 5:1 or even more.
With another GFC inevitable, offhsoring is the only way for these multi-national companies to remain competitive.