Are you a business leader contemplating offshore outsourcing to expand your team or optimize costs?
Offshore services offer a wealth of advantages, but there are critical considerations to harness the full potential of this contemporary employment strategy. Discover how offshore outsourcing can fuel your business growth and productivity while navigating the challenges that come with it.
Outsourcing in the Post-Pandemic Era
Prior to the onset of the COVID-19 pandemic, companies allocated only 31 percent of their budgets to offshore outsourcing, with a substantial 46 percent directed towards onshore operations, and the remaining 23 percent dedicated to nearshore activities.¹
After the pandemic, businesses were compelled to take necessary steps to sustain their operations. It has become commonplace for companies to seek assistance from service providers for tasks such as recruitment, marketing, logistics, and IT infrastructure maintenance. Furthermore, the practice of hiring entire teams from outside one’s city and country has become a viable option.
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Advantages of Offshoring Services for Your Business
From enhancing cost efficiency to assembling skilled and diverse teams, offshore teams offer numerous strategic advantages. Allow us to delve into these benefits, exploring whether offshore outsourcing aligns with your current business imperatives.
1. Access a larger pool of skilled labor.
As per the U.S. Bureau of Labor Statistics, the tech sector anticipates rapid growth, outpacing most other professions from 2022 to 2032, with an estimated annual average of 377,500 job openings attributed to both industry expansion and retirements.²
This signals a growing demand for tech experts to fulfill these future job openings. Offshore outsourcing offers a strategic solution to address the need for tech professionals, even if it entails recruiting talent from overseas. A 2021 global Statista survey highlights that key destinations for offshore business services include India, China, Malaysia, Indonesia, and Brazil.³
Once you gain access to a large pool of professionals, it will also be easier to select candidates with better qualifications without being limited to who is available within your office vicinity.
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2. Save on hiring costs, rent, utilities, and other in-house expenses.
Offshore outsourcing enables your business to achieve cost savings by delegating processes to regions with competitive labor costs.
Moreover, offshore outsourcing extends beyond labor cost savings; it encompasses substantial reductions in overhead expenses such as office space, rent, utilities, and maintenance. By eliminating the need for dedicated on-site facilities for your offshore team, your business achieves further cost optimization, enhancing financial efficiency and resource allocation.
3. Learn from diverse perspectives.
Offshore teams provide companies with a diverse pool of talents, ideas, and experiences. This multicultural dynamic foster innovation and comprehensive problem-solving. Additionally, diverse offshore teams offer valuable insights into global markets, aiding companies in tailoring their offerings to a more culturally diverse customer base.
4. Improve your turnaround times.
Employing an offshore team allows you to leverage time zone disparities to your advantage. While your in-house team rests, your offshore counterparts diligently manage projects and processes, ensuring timely and potentially accelerated task completion.
This strategic advantage is particularly beneficial during overnight occurrences, such as security incidents, where an offshore team in a distinct time zone can swiftly assist in addressing the situation.
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5. Focus on more important matters.
By outsourcing some of your business functions to an offshore team, you can focus on your core competencies and improve your in-house team’s overall efficiency.
For example, if you are outsourcing your cybersecurity and other IT requirements, you can focus on engaging your customers and creating products that would capture their interests. This does not mean that you give the offshore team free range on operations. You still have the authority to look at reports and ask for improvement on areas that could be better served.
Potential Challenges in Managing an Offshore Team
In adopting an offshore outsourcing model, there are a few challenges that you may encounter along the way. Here are some challenges, along with practical tips on managing them.
1. Different Interpretations of Language
While your offshore team members may be fluent in English, it’s essential to acknowledge the global diversity of the language. Variations in interpretation can lead to potential miscommunication between you and your offshore counterparts. To make sure that you understand each other well, you may want to:
- Communicate simply and clearly.
- Clarify any jargon that can lead to miscommunication.
- Ask for feedback to see if they clearly understood you.
Moreover, you can also include English proficiency tests as an application requirement.
2. Cultural Differences
Individuals often bring their own approaches to tasks. These differences can become more pronounced during cross-cultural collaborations. In the workplace, various cultural differences can come out especially on sentiment towards overtime, weekend and after-office communication, performance bonus, and more.
To ensure cohesion of the team and the successful completion of tasks, it is important to share well-defined goals and objectives. Even when diverse methods are at play, be sure to establish a unique company culture of communication and excellence that all members must uphold.
3. Varying Data Security Standards
While safeguarding data security is paramount, offshore teams may not immediately have the same stringent standards as in-house counterparts. Therefore, it’s advisable to seek an offshore provider with ISO 27001 Certification, signifying the establishment of a robust system for mitigating data security risks.
You can also initiate audits and company-wide system maintenance activities to ensure all data is safe, no matter where the employees work.
4. Unforeseen Costs
Offshore outsourcing can occasionally result in unforeseen expenditures, necessitating investments in supplementary resources like communication tools and project management. Additionally, government tax discrepancies may arise in the offshore team’s country jurisdiction.
To effectively control your budget, consider setting clear expectations with your outsourcing provider, preventing possible miscommunications that could result in added expenses. If feasible, explore contract negotiation options to align with your financial goals.
5. Disengagement of Internal and Offshore Teams
Given the geographical distance, offshore teams might experience detachment from the company’s brand and values, potentially feeling a lack of belonging compared to internal team members. This sense of exclusion can affect their engagement and morale.
Assigning a local manager to lead them may help them better understand the values of the company. This person can help your offshore team organize activities that can make them feel that they are a part of the culture you are building.
ENHANCE OPERATIONS THROUGH OFFSHORE OUTSOURCING AND PARTNERING WITH STRATEGIC SYSTEMS
Offshore outsourcing can be beneficial for your business beyond just saving on costs. It can help your business run smoothly and help it stay competitive through your partnership with a more diverse team. If offshoring your processes is something you are considering, Strategic Systems can be your partner.
Equipped with ISO 27001 certification, we deliver you enterprise technology services through innovative solutions across Data Insights, Cloud Advancement, Business Applications, and Cybersecurity. Contact us today and let’s start working together on achieving your desired business results.
References
1 Himmelreich, Heiner , et al. “Postpandemic Outsourcing Trends for CEOs.” Boston Consulting Group, 23 Feb. 2021, www.bcg.com/publications/2021/post-pandemic-outsourcing-strategies-for-ceos.
2 “Computer and Information Technology Occupations.” U.S. Bureau of Labor Statistics, Updated 6 Sept. 2023, www.bls.gov/ooh/computer-and-information-technology/home.htm.
3 “Leading Countries in Offshore Business Services Worldwide in 2021.” Statista, 15 Jun. 2023, www.statista.com/statistics/329766/leading-countries-in-offshore-business-services-worldwide/.
