Starting an Outsourcing Business
A lot of companies are increasingly inclined to outsource businesses that were performed once within their home nations to another company of also developing countries.
These businesses have services which include design, manufacturing, as well as customer service.
With concern to this development, a number of companies have already acted as intermediates among companies in every developed country that wants to outsource, and companies of also developing countries that desire to operate outsourced business.
Rule on Outsourcing Business
Your first step if you are going to enter this moderately challenging kind of business venture is to decide or choose which services that you are going to specialize in. The most considered outsourced service by far is manufacturing. This is because manufacturing is that of a labor-focused activity which are performed cheaply by many workers of low-wages. Some developing countries usually do not have sufficient resources that will enable them to produce profit-intensive services like those of engineering design in an economically sufficient manner. However, if you are thinking of the Computer Industry of India, for additional information purposes, they are considered to be an exception to this rule.
Things That You Must Include in Your “To Do List”
Second thing that you are going to do is to establish your own corporation in your home nation. At this point, you have to make sure that your corporation is adequately and entirely capitalized. It is less desirable to establish a Limited Liability (LLC) since a few of the foreign countries are not so familiar with the business form of the Limited Liability Company (LLC) Business. After you have established a well capitalized corporation, the next thing for you to do is to set up representative offices in the foreign countries in which you are planning to have your outsourcing services.
In several countries, most especially China, a representative office is considered to be a branch office instead of a subsidiary of the main company. Quite interestingly, it is also a lot easier to establish one. Even though representative offices have been generally prohibited to engage in activities which are direct profit-intensive, they are still permitted to find local contracts, bring contacts to the main office, and even the negotiation of the contracts provided that these contracts have been duly signed in the home country of the company. In this case, capital contributions in minimum are also required.
Furthermore, communicating with the local manufacturers and other providers are also very helpful. While doing this, do not forget to acquire their production cost’s estimate. The importance of this is that they will provide you the fundamental for negotiating the outsourced services’ price. You can also use the manufacturing directories as well as other sources of facts to find companies in your country which will provide you benefits and edge from outsourcing the services that your company specializes. You have to keep in mind also that brokers often deal among companies in your country as well as other service providers in other countries where you are maintaining your representative offices.
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