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Offshoring and innovation

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05 Sep 2013

A joint study by the Australian Institute of Technology and Management Centre Innsbruck found companies that offshore manufacturing spend more money on innovation than their competitors who manufacture domestically. When organizations reduce manufacturing costs, they are able to devote more of their budgets to research and development and stay more innovative than they would otherwise be able to do. In many fields, innovation is the difference between success and failure. Offshoring as an expansion strategy allows more dollars to go toward product innovation because nearshored manufacturing  is of equal quality with domestic manufacturing, provided a company chooses wisely.

American companies should strongly consider offshoring to Mexico. According to a study by AlixPartners, manufacturing in Mexico is more cost-effective than doing so in China and India, both of which may come to mind before Mexico does. Given supply chain and shipping requirements, Mexico's proximity to the U.S. is a huge asset. The costs of labor, parts, real estate and currency exchange are also extremely competitive. Offshoring can save companies money, which is always beneficial. Furthermore, it can free up capital for innovation - arguably one of the most important aspects of running a business.

U.S. companies can further reduce their costs by investigating reputable shelter companies. These firms can offer significant savings to companies that choose to manufacture in Mexico through a host of comprehensive management and infrastructure services. Having a company to navigate the intricacies of beginning to manufacture in Mexico can remove a potentially time-consuming burden, giving further resources to businesses that they can use for research and development rather than only expansion and manufacturing.

The Offshore Group: You Manufacture ... We Do The Rest

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