What factors have led to HSBS's offshoring policy What benefits does Assignment

What factors have led to HSBS's offshoring policy What benefits does HSBC gain from this - Assignment Example The operating profit of the group was $5,298 million during 2009, with a reduction of 30.7% from 2008. HSBC has become largely involved in the process of offshoring with an aim to decrease costs of labor. (Data Monitor. 2010) This paper will focus on the issues relating to offshoring by one of the globally known financial service provider HSBC. It will mainly discuss the factors that have led to the company’s offshoring policies and what kinds of benefits are being derived by HSBC Holdings from its offshoring activities. A brief note about Offshoring; Exporting jobs that is commonly known to be as offshoring has become widespread across the world. Companies based in developed regions are getting involved in offshoring to low cost regions of the world. Offshoring mainly implies relocation of jobs with the purpose of reducing costs of production. India and China have become the most important service providers. From the macroeconomic perspectives, there has been a huge debate ov er whether it offshoring is good or bad for the economy of the exporting countries as well as to the economy of the importing countries. Particularly, major concern has been raised regarding the impacts of offshoring on the economy of the importing nations, like USA, UK, other European nations, Australia, etc. A huge number of highly recognized and highly profitable companies of these nations are involved in offshoring. (Abramovsky et al. ... (CORPORAT E PARTNERS RESEARCH PROGRAMME. n.d) The labor available in UK and other European countries are quite expensive compared to the labor available in countries like China and India. Many people have expressed their concern over the effect of offshoring on the domestic economy and domestic productivity of UK, but this concern has not quite affected one of the largest financial service providers of the country. In fact, the extent of offshoring has been increased by HSBC to reduce their fixed and variable costs of production. Major motivational factors behind offshoring: Major motivational factors that have played crucial role in adopting the path of offshoring by HSBC can be as follows: First, a financial service provide generally gets the opportunity to of investing in global securities by adopting the path of offshoring. Very often many top performing securities are not available to the citizens of the UK and thus the investors of this country generally does not get the option of investing in these securities that provide lucrative returns. But offshoring makes it possible to make these global top performing securities accessible to the investors. (Clark, 2009; CORPORAT E PARTNERS RESEARCH PROGRAMME. n.d) Second, a banking service provider that opts for offshoring becomes able to provide its banking account holders the opportunity of accessing all those banking products that would not be available otherwise in the domestic market. (Clark, 2009; CORPORAT E PARTNERS RESEARCH PROGRAMME. n.d) Third, the level of confidentiality is much higher in case of offshoring banking services and hence investors become more interested to purchase