Are you stuck in the quandary of whether to offshore your business processes, even though you know it’s cheaper than using onshore service providers? Your apprehension is probably rooted in a lack of information and clear benefits. Unfortunately, people use outsourcing and offshoring synonymously—it’s a blunder. Here’s some perspective with regards to offshore outsourcing.
In its initial days, founders of WhatsApp, the American Voice-Over-IP (VoIP) and free messaging application, offshored development to Russia because of low-cost services. Amazon, the American tech company focused on e-commerce, artificial intelligence and digital streaming services, offshored its call center process to South Africa, then the Philippines. Later, the company also offshored its Research and Development (R&D) projects to Ukrainian startups excelling in home-security solutions. Offshoring allowed Amazon access to a wide talent pool and reasonable labor costs. Samsung, the South Korean electronics and smart appliances company has a smartphone manufacturing plant in India.
As you have probably worked out from these examples, simply put, offshoring is the act of transferring business activities or processes to a service provider in another country. As a business owner, if you’re looking to scale your business, the benefits of offshoring can certainly outweigh the cons.
In this article, we’ll highlight some key advantages of offshoring to help you make an informed choice.
Keys Benefits of Offshoring
Access To Affordable Labor and A Diverse Talent Pool
Given that developed countries have a high cost of living, hiring skilled resources is an expensive affair. For this reason, you should consider offshoring your business activities to countries like India, China and the Philippines, because of their lower costs of living, compared to the US.
One of the long-term benefits of offshoring is that you get to reduce or even eliminate fixed costs like recruitment. Offshoring service providers can regulate manpower demands in accordance with your business requirements.
Cost Savings and Financial Incentives
The second most significant advantage of offshoring is cost-effectiveness for labor-intensive businesses, such as manufacturing.
Minimal in-house staffing requirements will help reduce infrastructural or real-estate costs i.e. you will require less office space. You can invest the infrastructural savings in critical business processes. For instance, if you run a manufacturing business, you can invest the savings in supply chain management.
The government in offshoring countries also allow tax grants and financial incentives to international businesses as a way to boost their economy. For instance, the Philippines’ government follows a set of regulations to invite foreign direct investment (FDR).
Government grants are often coupled with other financial incentives such as tax holidays to make offshoring relocation more affordable for foreign businesses. You get to maximize your profits as a result of these tax benefits.
24/7 Operational Capability
One of the most lucrative benefits of offshore outsourcing is the 24/7 operational capability. An offshoring service provider helps run your processes around-the-clock regardless of the time zone difference. How, you ask? Offshoring teams are spread across different time zones and locations in the world.
That’s how they are able to keep your business running even when you’re asleep. This way your in-house team can relay incomplete tasks or any feedback to the outsourcing teams once their shift is over. It will help increase efficiency and ensure operational consistency, which in turn will help you deliver better services and improve customer experience.
Increase in Operational Autonomy
Outsourcing a part of your business limits your control over operations—not if you choose offshore outsourcing.
One advantage of offshore outsourcing is that it lets you retain autonomy over your business operations. Offshoring partners train their staff and let you share instructions allowing you to retain core control over your processes.
Sustainable Scaling Opportunity
Achieving scale and retaining employees are the two most significant challenges for a business. Recruiting a single resource requires significant finance. Add to it, the burden of employee turnover, which leads to more recruiting and training costs.
Offshore outsourcing helps you avoid these challenges by eliminating the need to expand your in-house team. Offshore teams manage day-to-day business activities so that you can focus on core business functions and ensure sustainable growth for your business.
Access to a Global Marketplace
Your offshore workforce acts as an extension of your business to help you explore new markets across the globe.
International outsourcing teams offer a better understanding of the native markets, regional trends and risks, which you may not effectively understand. An offshore outsourcing partner can help you identify profitable locations across their country where you can expand your business.
Hopefully, these benefits of offshore outsourcing will help you make the right choice with regards to scaling your business.
At HelioNext, we’ve been offering best-in-class back-office management services and technology solutions to global clients for more than 15 years. We work behind the scenes to help you focus on increasing your business footprint and improving your revenue.
Are you ready to scale your business? Get in touch and we’ll design a customised solution for your business needs.