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When Cultures Clash, Businesses Turn From Offshoring To Backshoring

The trend of offshoring white collar, highly skilled positions continues to be strong, but “backshoring” these positions to the US is a trend that appears to be growing.   Backshoring usually occurs for a combination of the following factors: cultural misunderstandings, unexpected management needs, low skill levels, work that is too complex, and high turnover in the offshore workforce.   Turnover in offshored positions can be as high as 50 percent in less skilled positions and as high as 20 percent in highly skilled positions.  Many employers, particularly those who offshore positions strictly as a means of cost cutting, find out the hard way that in many cases, offshoring can be a competitive disadvantage.  In fact, some employers now believe that not offshoring offers much more of a business advantage than does offshoring.   As a result, many companies are backshoring positions and tasks to regain that advantage.  But if an offshoring company has no contingency plan in place to account for the failure of offshoring, backshoring can be very difficult and pose a new set of problems for the company. This piece examines the problems that two companies experience when they offshored some tasks and had to backshore those same tasks when the experiment failed.