Offshoring Strategy after Bailout

Last week turbulence in the US financial Market put US president at his toes, which made him to request for the 700Bn$ bailout pay package from Federal reserve. But the question is what happen to the Offshoring strategy after this bailout. Will these International Investment Banks, can still able to leverage their offshore strategy? The answer to this question is may be or maybe not.

So first consider the negative aspect i.e. May be not :-)

1. The first step these ailing bank will do to sustain or rebuild the faith among their customers, so in order to do that they may spend more money on the positive advertisement of their image and financial products, which means some offshore budget cut.

2.In this ailing market conditions, some of the majors mergers and acquisition has taken place, which might have sucked up the revenue from the balance sheet of the major banks at the Wall streets.

3. Prior to US president 700bn$ package, 10 major banks already pooled together 70bn$, to improve the liquidity situation in the market.This action also hurt their revenue, and tighten their hands for more leverage.

Now consider the positive aspect, the May be one

1. One prominent reason for more leverage of Offshore strategy is to gain the competitive edge. During recent Subprime crisis, we saw that some of the major banks post some gargantuan losses, while their competitors sailed through untouched. Now, its the time of these competitors to gain that competitive edge, which means they will certainly redefine their offshore strategy, to get that winning edge.

2. Recently we saw some major acquisitions at Wall Street, which means the Acquirer has to merge different entities with its operations, which might be a goldpie for the offshore service provider.

So from my opinion the Offshoring leverage can be slided to either end. So lets wait and watch.

Thanks&Regards,
Mohit Kumar