8 Reasons Why You Should Consider International Outsourcing & Offshoring

The competence of a company's workforce is integral to its success. However, building a reliable in-house staff is more complicated than it seems, especially with recruiting challenges such as rising market rates, complex employment regulations, and limited local labor forces.

Businesses can bypass these restrictions through outsourcing or offshoring. While these are two different practices, they both allow organizations to delegate tasks and processes to a remote workforce.

Many enterprises explore either option or a mix of both for various reasons. They may want to leverage the benefits of lower labor costs, more diverse talent pools, and lenient regulations. Read more below to know how outsourcing and offshoring can benefit a business.

But first, what is the difference between outsourcing and offshoring?

How Outsourcing Works

Outsourcing works by hiring a third-party provider to perform tasks previously done in-house. Clients can delegate certain activities in a short- or long-term contract depending on their chosen outsourced services. These responsibilities can range from customer support to information technology (IT).

People sometimes use outsourcing and offshoring interchangeably. However, there are substantial distinctions between the two terms.

For instance, outsourcing entails contracting out work to a vendor that may or may not be in another country. Simply put, it's possible to outsource processes to a provider without sending them offshore. A North American company, for example, can hire a local accounting firm to oversee its bookkeeping instead of doing it in-house.

How Offshoring Works

The geographical aspect is what primarily distinguishes offshoring from outsourcing. In offshoring, a company relocates some of its operations and personnel to a different country, giving them access to a broader talent pool. Moreover, companies can establish offshore operations without using a third-party provider. This way, they can manage an offshore team outside their home country.

The Advantages of Outsourcing and Offshoring

While they differ, outsourcing and offshoring can benefit your business. Here are some essential benefits you may want to consider when choosing between outsourcing and offshoring.

• Reduced costs

Labor costs are constantly on the rise. Moreover, an employee's monthly paycheck doesn't account for the overall compensation, which includes training, health care, travel, insurance, and other benefits. Furthermore, overhead expenses for infrastructure, technology, office space, and equipment can all impact your bottom line.

Cutting Costs with Outsourcing

Outsourcing can considerably cut or eliminate many of these costs. You won't need to lease new office space, maintain extra equipment, or add to labor-related expenses. On top of this, since these specialists already have the skills, you won't have to spend resources on supplementary training.

Many outsourcing agencies offer flexible rates as well. For instance, your outsourcing partner can charge either for output volume or working hours. This adaptability will allow you to budget better for jobs and projects while meeting your company's financial goals.

Cutting Costs with Offshoring

As for offshoring, labor costs and tax conditions are more favorable in certain countries.

For example, Malaysia, India, and the Philippines have a growing pool of experts in code writing and software engineering. That said, there's a significant disparity between the salaries of IT professionals in the US and their counterparts in Southeast Asia. Hence, you can benefit from the skills of an IT expert while also paying less by offshoring.

• Access to global talent

Companies are ramping up their recruitment efforts to fill vacancies. Their initiatives make it a competitive market for skilled labor. Accordingly, offshoring and international outsourcing can address problems arising from tight labor markets. Instead of compensating your new hires' relocation to your base, you can work with foreign third-party providers with the required skills.

Moreover, they enable businesses to hire global talent qualified in different industries, including banking, financial management, customer service, IT, content marketing, and securities trading.

Even if your ultimate objective is to eventually build a fully functional in-house staff, outsourcing or offshoring can help you get there faster. Your partner firms can assist you in saving money until you can afford to make permanent local recruits.

• Increased flexibility and scalability

The lack of resources is usually the main hindrance to a company's growth. Businesses often lack the time and money to hire new employees and build a large enough workforce for a successful expansion. As a result, they lose the chance to capitalize on potential growth opportunities.

Fortunately, global outsourcing companies can quickly set up a remote crew for your business. This benefit frees up the funds you can reinvest in your company's expansion. Besides that, they can give access to extra labor temporarily. Since vendors offer flexible arrangements, you can hire them when you need additional help, such as during seasonal peaks, unforeseen market shifts, or unexpected early attrition.

Significant changes can alter a company's business strategy, operations, and organizational culture. So, while the business transitions or expands, outsourcing specialists is more cost-effective than hiring full-time employees.

• More resources for core duties

Outsourcing enables you to assign time-consuming and repetitive tasks to an offshore employee. This way, your onshore team's workload lightens up. As a result, your local staff can concentrate on more critical assignments and drive productivity while your offshore crew supports them by taking on backend duties.

This setup boosts overall productivity. Enlisting your third-party's services can improve workforce efficiency and even employee satisfaction. When your employees are not overworked and have a reasonable number of responsibilities, they feel may that the company values them.

Additionally, your partner agency can boost customer experience and satisfaction by leveling up the quality of communications, expanding your availability to clients, and making expert services available anytime. You can even set up a 24/7 customer support line. Doing so allows your onshore workforce to focus on relationship building while your offshore team handles customer care.

Venturing outside your organization is best during expected demand peaks. Your outsourced team can help you save on human resources and benefits administration costs while minimizing your dependency on full-time onshore employees.

• Improved quality of work

When your workforce is overburdened, outsourcing can be a lifeline. Some businesses may predict and prepare for their busy seasons. However, others cannot quickly expand their permanent personnel to keep up with higher demand. As your in-house employees' responsibilities increase, outsourcing and offshoring can help them stay on track and produce better quality outputs.

There are contractors for almost any form of work. You can also enlist their help to handle tasks outside your personnel's responsibilities.

For example, assume your company is gearing up for a social media campaign. Consider outsourcing social media marketing instead of adding the workload to an already busy communications team. This way, your staff can concentrate on their primary job. In turn, both the onshore and offshore workers can perform excellently.

• Better efficiency and time management

A crew based in a foreign country eliminates the limitations of the typical eight-hour workweek on your operations. A regular work setting usually only functions from 9 a.m. to 5 p.m. in your time zone. While a reasonable duration, you may miss some business opportunities during your downtime.

With the help of an offshore team, your IT, customer support, or manufacturing processes can continue even after your local employees clock out. You can build a 24-hour work cycle by hiring a third-party provider in a different time zone. This way, your offshore crew can take over after your regular staff completes their tasks.

• Access to foreign markets

Employing an offshore vendor doesn't just give access to professionals with extensive industrial experience. They are also more familiar with their local market's sensibilities, behaviors, and attitudes. Therefore, they can help tailor your services and marketing efforts to meet the local's needs and preferences should you tap into their market.

Moreover, you can build business relationships outside your home country by working with an offshore partner. Consequently, these connections can help in your plans for international expansion.

Access to foreign markets is especially crucial if your business falls under e-commerce and retail. You can break free from geographical restrictions with an offshore team and reach a wider audience. More than that, you can transport your goods to a larger market and yield greater profits.

• Improved risk management

High attrition rates negatively impact an organization's growth. Accordingly, when employees resign early, companies can suffer significant financial losses considering the funds for their recruitment, training, and compensation. Moreover, downtime from unexpected vacancies can lead to lost business opportunities or reduced overall productivity.

Offshoring and sustainable outsourcing can help you devise a strategic risk management plan, especially during early attrition. Additionally, the risks are far fewer when you work with an outsourced team. There is no need to shell out money for in-house training or employment benefits.

Enable Your Business with Offshoring and Outsourcing

Outsourcing and offshoring offer many benefits for companies of different sizes and industries. They enable businesses to streamline operations, boost productivity, practice better time management, and cut overhead costs. If you wish to drive business growth, offshoring and international outsourcing are options worth venturing into.