Outsourcing or offshoring has probably crossed your mind if you’ve recently experienced the challenges involved in attracting and retaining competent staff.
Or, if your operational costs are going through the roof and now more than ever, you’re forced to look for alternatives in order to stay competitive.
Assigning tasks that are traditionally done by internal staff to a third party or moving your operations to a foreign country is a strategic move.
In both instances, you enjoy reduced business costs since work is delegated to outside vendors.
It’s common for people to use offshoring and outsourcing interchangeably. Indeed, their differences are not immediately apparent.
Since you’re seriously considering one of these options, it’s worth understanding what these two processes mean and which one is of greater benefit to your enterprise.
Hint: The little-known benefits of offshoring may convince you!
What’s the Difference Between Outsourcing and Offshoring?
This is the question that’s probably on your mind.
Let’s discuss it further!
What is Outsourcing?
With outsourcing, you designate specialized tasks to a company’s team.
You get high-quality work at a lower cost than if you were doing it in-house.
Team members’ remuneration and performance cease to be a headache for you, which frees up time to focus on core parts of the business.
What is Offshoring?
In contrast, offshoring involves building a team to perform business processes in a foreign country whose favorable regulations, skill-base and economy can be leveraged.
The team is salaried and can work full-time, part-time or in shifts.
You’ll be responsible for managing the team deliverables, communication, conflict resolution, and appraisals.
The Real Difference Between Offshoring and Outsourcing
Many business owners prefer outsourcing because offshoring often receives a bad rap.
There are those who believe that offshoring is not manufacturing-centric and leads to reduced quality of products and services, while others are convinced that foreign workers don’t contribute to the economy.
But offshoring is not the villain as is often portrayed.
Offshoring’s advantages arguably put outsourcing in the shade.
And, that leads us to our next section.
6 Benefits of Offshoring That You Need to Know
The 6 benefits of offshoring are:
- Complete control of your business processes
- Access a broader talent pool
- Higher productivity at a lower cost
- Offshore workers become a part of your team
- Little reliance on third parties
- Establishing a global footprint
Let’s explore these advantages in a little more depth.
1. Complete Control of Your Business Processes
Offshoring enables you to assemble a core group of workers who focus on your business exclusively.
They tend to have a higher sense of accountability than outsourced staff.
This is enabled by the regular communication that you have with them and the many opportunities you have to convey your vision, enthusiasm and company objectives.
To negotiate an outsourcing contract, you need to invest in a huge one-time cost and work out how to transition to the vendor’s processes.
Offshoring only requires you to draw up an offshoring contract that clearly outlines your expectations, staff deliverables, and compensation.
There’s staff transparency, so you can gauge how much training they need and determine payments based on the value that they bring.
Outsourcing doesn’t give you the option to choose the team members that would work on your tasks or the role they’ll play.
The talent can be fired or uprooted from your project to work on another client’s deliverables and you’ll have little to no say in how they are managed.
2. Access a Broader Talent Pool
Technological advancement is slowly phasing out the 9-5 work dynamic and emerging generations now aspire to be global employees.
Modern-day employees want to be tethered to a purpose; they desire flexible work schedules, higher pay and opportunities to work on different projects at a time.
If you’re thinking of offshoring, rest assured that there is a pool of dedicated, competitive workers ready to work with you.
You’ll fill positions fast and start onboarding them since offshore workers are in high supply.
Are you aware that a business like yours can profit greatly from virtual support?
Virtual assistants save you time and money.
They focus on tasks you needn’t be doing on your own as well as those that you can’t do yourself.
Best of all, VAs can either be generalists or specialists.
Small Revolution’s Virtual Assistant Salary: The Definitive Guide (2019) outlines the extensive range of tasks that you can expect specialist and generalist VAs to perform as well as their salary expectations.
Did you know that you can pay a specialist as little as USD $1,500 a month to perform services such as graphic design, SEO or web design? And that’s on the higher side.
That’s pretty low compared to hiring a full-time employee or an agency to handle these tasks.
Generalists charge USD800 at most.
A virtual assistant will charge you based on their level of expertise and the type of services you need.
3. Higher Productivity at a Lower Cost
With offshoring, you can take advantage of the time difference. Do you need some work done overnight? Your offshore staff will deliver it in the morning without sacrificing their sleep.
The same goes for customer service during outside hours and public holidays.
You’ll also quickly realize that offshore workers are more self-motivated than outsourced workers.
After all, their curiosity and drive pushed them to adopt a global mindset and seek opportunities outside their home country and their comfort zone.
Since offshore worker earnings are determined by work output, you can be sure they will deliver high-quality work on time.
And the pay is usually higher than what they’d get working for a company in their own country.
They get to work when they’re most productive, unlike outsourced staff who even on their worst day must typically sit in an office all day to deliver results for the client.
They also join your team with fresh perspectives and challenge you to be a better leader as you overcome language and communication barriers.
You have an opportunity to provide ongoing training to your offshore team, enabling them to continually improve their skills and make longer-term contributions to your business.
Their career growth gives them confidence at work, a positive attitude and opportunities for advancement.
Once you provide your staff with the skills required to reach their full potential, they’ll reward you with their best work and loyalty.
4. Offshore Workers Become Part of Your Team
Offshoring makes remote workers part of the team, which is important for company culture and smooth business operations.
Since they’re working towards a common goal, offshore staff register higher levels of morale.
They learn from each others’ mistakes and are inspired by other members of the team to improve.
Whereas liaising with an account manager from a third party makes it almost impossible for you to be invested in the lives of their hires.
You don’t get room to touch base with them and find out how they’re personally doing. All you get is a report, sent in periodically, to let you know if and how your work was done.
5. Little Reliance on Third Parties
If things go wrong as they usually do, you need to be the first to know. This isn’t possible when you’re outsourcing services to a third party.
You’ll be at the mercy of strangers, hoping that they understood the brief and are performing the tasks accordingly.
If you don’t know what metrics to look out for, especially in data-driven services such as paid advertising, market research or social media management, a fraudulent vendor may manipulate reports.
This lack of a hands-on approach can negatively affect your business objectives.
Sometimes a third party company may have poor familiarity with your business. Not to mention the fact that they work with several different companies at a time.
They’re more concerned with their bottom line rather than the inner workings of your business or industry.
Outsourcing tasks where the vendor directly deals with your clients, such as customer service, compounds the business risk and risk to your bottom line and your reputation.
Offshoring ensures your active involvement with service providers.
You get first-hand information when things go amiss and you can come up with solutions fast.
6. Establishing a Global Footprint
Offshoring is a brilliant way to build your business’s global presence. Think about it; having workers from all over the world gives you more brand exposure.
Moreover, contented workers tell other offshore workers about your company, which makes it easier to attract competent staff in the future.
Offshoring continues to trend as an effective way for businesses to cut costs, hire top talent and get work done.
This strategic advantage will expand your business, which will result in you hiring workers from home and abroad – a win-win for everyone.
Conclusion: Why You Should Use Offshoring For Talent Acquisition
So there you have it…
Offshoring’s benefits certainly stack up against alternative recruitment strategies such as outsourcing.
Offshoring helps you:
- Maintain greater control of your business processes
- Tap into a truly global talent pool
- Enjoy higher levels of employee productivity
- Foster teamwork
- Maintain autonomy and reduce business risk
- Grow your business footprint
But, whether you outsource, offshore, or do a bit of both, it’s about finding the right people to help you scale successfully.
Reach and talk to your network — ask questions, find out what works and doesn’t work from those who’ve tried. You’ll get a few bad stories.
But you’ll hear just as many good ones.
Learn from others’ mistakes and trust in your system.
Your growth — and success — depend on it.
