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Offshoring to provide benefits for decades

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Offshoring is providing benefits for decades to come

Businesses could soon start looking to make overseas money transfers as offshoring operations can still bring businesses a quick return on investment, according to OMC Partners.

David Ellis, a partner with the management consultancy, said that companies in financing and accounting industries should see a payback "in less than three years", while some businesses can continue to see benefits for up to 30 years.

"In business, a three-year payback on a long-term investment is pretty good. The thing about this is that you get payback in year four, year five, et cetera. It just keeps going on," he commented.

Mr Ellis said it was a myth that inflation was making traditional outsourcing destinations, such as India or China, as expensive at the UK in terms of wages.

"That's complete and utter nonsense," he explained. "Most analyses indicate that there is at least a 25 to 30-year benefit."

Given the long time frame to work with, Mr Ellis says companies will adapt to find other solutions well before prices level off in developing nations.

Businesses may be further compelled to look abroad as foreign exchange specialist Pure FX warns that a rake hike is likely this year.

"I'm going to stick my neck out and say there will be one rate rise," commented James Roberts, a director with the company.

He explained that the Bank of England (BoE) was afraid of hurting the economy with such a move and believes it could hurt consumers and businesses, however that is all set to change.

"I actually think the UK economy is doing alright and we'll see better signals of that towards the end of the year," Mr Roberts said.

"Once those signals come through the BoE are going to have to start raising rates because inflation at that point will still be pretty high."

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