Definition
What is Offshore Outsourcing?
Offshore Outsourcing is a form of where the organization or an individual seeks to outsource a or an entire operation to another country where labor is less expensive.
has been a common practice these days, thanks to the advancement in technology and the growing global economy. It has helped companies from all over the world to increase their profits and bring down the of production.
One of the most common practices is the of certain processes like a call center, customer service, technical help desk, computer programming, transcription, research, analysis, etc. They could be done at a in countries that have a large pool of skilled labor and competitive of operations.
Benefits of
companies offer their clients skilled resources at a very marginal . The of developing resources from scratch to reach the level of quality would be very high. Even for common tasks, can conserve a lot of resources while providing the same result.
The main benefits of are:
- Access to a global talent pool. Access to a worldwide talent pool gives businesses the opportunity to avoid a skills gap, which is particularly crucial in the face of growing concerns over the availability of skills in the domestic market.
- competitiveness. An offshore workforce can be hired at a much lower rate than a domestic one.
- Unique opportunities. Many firms viewed as the first step to expanding their globally, which led to globalizing their .
- Improved ROI. One of the most important reasons for businesses to outsource is to improve ROI (return on investment). Firms realized that is a key competitive strategy that can save time and money in the long term.
It’s a fact that throughout the world, most small to medium companies outsource their services to some other and generally, they end up saving a lot of money from this act.
Pros and cons of
Like any operation, advantages and disadvantages are both present. is no different. May it be large scale or small scale, there are always some pros and cons involved. However, the disadvantages of are usually over-exaggerated while the advantages are usually overlooked.
- Get access to a pool of skilled resources, especially when there is a shortage of talent domestically.
- Leverage the same expertise at a , and also compete on the global market.
- Low : Labor is the largest percentage of the of producing a product or service in a .
- Companies save on the of office space.
- They don’t have to invest in equipment or train new employees to fill vacancies.
- They can offer more competitive rates for services and products without increasing their prices.
- Symbiotic Process: is symbiotic. Both the corporation and outsourcer benefit from the relationships.
- Different time zones, language and culture, longer decision-making, and a lack of trust are some of the challenges faced during the process.
- Lack of technical collaboration delays the speed of delivery and the level of quality.
- It comes with risks such as security breaches and intellectual property theft
The cons of can be avoided by working with an experienced who has been in the industry for many years and knows what they’re doing. They will also provide you with contract terms that will protect your ‘s assets so you don’t have to worry about security issues or intellectual property theft.
Difference between offshore and
The main difference between offshore and is that while both involve businesses relocating operations overseas, offshore refers to such relocation occurring in a whereas onshore relocation occurs within one’s own country or region.
Offshore Outsourcing
It is a process of processes, functions, computer services, and IT support and maintenance to a cheaper location, usually a country with a low of labor and other associated reasons. These reasons include low communication , cheaper operating , appealing , and skilled labor availability.
As the name suggests, “” takes place outside a ’s own borders. For example, a may outsource its call center operations to the Philippines.
Onshore
is done when the resources you need for running your are locally available to you. For example, if you operate an e-commerce store, you can hire a to build your e-commerce platform or you hire a to create content for your website within your country or region.
On the other hand, “” takes place within a ’s own borders. For example, a may outsource its human resources needs to a third-party executive search in the same country.
There are many benefits for both types but is best used when looking for an economical solution. There are many more benefits of such as geographical proximity, cultural similarities, and greater ease in managing projects and employees with no time zone differences.
Examples of offshore staffing
Call centers and BPOs are the most immediate examples of companies. They perform services that support customer-facing processes for U.S. or other companies that are in industries such as travel, retail, healthcare, and telecommunications. Call center companies are the most readily identifiable and known for their outsourced operations.
An example of the process involves a US hiring a Philippine to provide customer service, and a US computer hiring an Indian to provide programming for their .
Why do companies offshore?
There are many different reasons owners decide to offshore certain operations. These are:
- The most common reason a may have offshore operations is to save money. It is well known that manufacturing costs and labor costs are far lower in countries where the of living is much lower.
- For a better, educated workforce. In some countries, there is a better work attitude than in other Western countries.
- To save time and gain access to a larger talent pool.
- To access better Infrastructure and technology.
- Productivity: In markets with young and fast-growing workforces, are more motivated than their counterparts in .
Philippines
The Philippines have long been an attractive location and is touted to be such in many publications by enterprising authors. While the cost-saving of to the Philippines has indeed attracted many companies to set up shop, the savings is only 1 of the factors that contribute to the attractiveness of the Philippines for .
Beyond the low wages of , the Philippines has the benefit of a ready-made English-speaking workforce that is highly educated and hungry for work which is rare to find in low- destinations like India and China.
If you are looking for more information on to the Philippines you can contact Digital Minds BPO and get a free consultation. We will provide you with an to help you with your processes. Our start with as little as $4 per hour and you save up to 70% on staffing costs. We offer solutions that help businesses save time, money, and resources.