Diginuvo’s offshore subsidiary offering enables our clients to set up a managed or wholly-owned offshore subsidiary company with its own management team and supporting infrastructure. This is suited to organizations with clear vision and objectives, and those who want to realize long term strategic benefits of offshore operations that transcend one specific project.

In this engagement model, Diginuvo charges a fixed management fee in a long term contract to source dedicated assistance on the ground, provide infrastructure and HR resources , manage facilities, ensure legal and regulatory compliance, and start operations with the recruitment of the senior staff required to set up and manage the subsidiary.

The strength of this model is in its ability to grow organically from small teams to several hundred people. Having dedicated resources helps to protect client’s intellectual property assets, and ensures that knowledge is retained within the company and always available to the client. However, this requires a higher capital expenditure from the beginning and very little cost advantage over dedicated offshore staffing can be recognized until the subsidiary is significantly scaled up and independently profitable. In addition, attention should be paid to local taxes, rules concerning the transfer of funds and transfer pricing, and regulations related to liabilities.

Advantages

• Complete control over resources and management
• Continuity of resources
• Retention of intellectual property and knowledge
• Cohesive and consistent understanding of products, corporate goals and business practices
• Improved communications by continual reinforcement and experience
• HR and administrative costs are inclusive
• Supplied infrastructure
• Long-term cost savings

Disadvantages

• Only suited to long-term and guaranteed ongoing resource requirements
• Close management of offshore staff required
• Potential long wind down period, or financial penalties if requirement no longer needed
• Long term investment
• Lead-time before seeing return on investment while the subsidiary ramps up
• Legal responsibilities
• Upfront capital investment
• Ongoing management cost, rent and infrastructure for running the operation

Criteria for using offshore subsidiary

Consider setting up offshore subsidiary when:

• There are guaranteed long-term requirements
• Continuity of resources is required
• Ongoing support and maintenance are required
• It is expedient for the company to establish a subsidiary