The essentials of outsourcing

Derek Gallimore is a contributor to Forbes.com and a member of the Forbes Business Council. This article was first published on Forbes. 

Offshore staffing is a business tool that allows companies to hire incredible offshore staff at an enormous discount. You basically treat the staff as your own employees, except all of the legal, back-office, and infrastructure is taken care of for you. Businesses have been doing this in its modern form as far back as the 1960s.

Outsourcing transforms businesses by changing the foundation of employment norms. The word itself can be interchanged with offshoring, distributed workforce, call centers, staff leasing, and remote working. Firms get easy, flexible access to high-quality staff, processes are streamlined, the workflow becomes shorter and more precise, and outcomes are improved.

Simply put, offshore staffing can be a game changer. But it’s important to know and understand how it works, even if you choose not to adopt it for your company. As Singapore’s late prime minister and founding father said, “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”

Outsourcing is not a magic bullet though. It can have its downsides, and many businesses walk away from it after being disappointed with the results. So, let’s explore some of the pros and cons of outsourcing and how to make it work for your business:

Benefits Of Outsourcing

1. It can save you a lot of money.

One of the most obvious reasons for outsourcing is to save money. While employing people is generally always going to be costly, I’ve found that using offshore staffing can help companies save as much as 70% on their all-in staffing costs due to dramatically lower salary norms.

Not only is outsourcing cheaper, but it also removes some of the complexities and costs of employment — legal, recruitment, compliance, taxation, health care and office management, to name a few. Outsourcing offers a supremely flexible approach to employment.

2. You can access more high-quality candidates.

Offshore staffing means you can access even more prospective employees, as you aren’t limited to local candidates. Accessing great staff is a challenge for all businesses, so why limit your chances of finding that perfect candidate to your local geography or market? When you look at employment from a global perspective, it opens up incredible employment opportunities.

Normally, the recruitment process is cumbersome and expensive for businesses. When you are outsourcing, the outsourcing company will generally take care of this for you, including screening, hiring and onboarding.

3. You can double your workforce.

Outsourcing isn’t just about saving money. Imagine what you could do and how you could outcompete your market if you could double — or triple — your workforce for the same cost. That’s possible with outsourcing.

Doubling your workforce means you have double the resources to grow, develop, sell, research, service your company, clients and product beyond limitations.

4. Outsourcing changes lives and businesses.

The business process outsourcing (BPO) industry doesn’t only transform businesses, it also changes lives. Here’s how:

• For businesses: Outsourcing generates more growth, higher margins, increased profitability and the opportunity to concentrate on core activities and expand.

• For onshore employees: Contrary to misconceptions, outsourcing can offer more security and more opportunity to thrive. Outsourcing can increase profitability and resources. This means that onshore employees have more secure employment and can focus more on core tasks and roles of higher value-add to the company.

• For offshore outsourced employees: Outsourcing is an economic boon. The salaries might look low compared to Western counterparts, but they are relatively highly paid jobs and offer enjoyable, safe and engaging careers.

Not only does the industry provide valuable economic stimulus and job opportunities for all, but it also serves as an avenue for connecting different nationalities across the globe.

Challenges Of Outsourcing

1. It’s remote.

People have different opinions of remote work — some love it and some hate it. But with outsourcing, you have no choice. Your offshore team will be based in another country. So, for outsourcing to work, you will have to embrace remote work and the default remote tools. Let’s face it, remote — and thus, outsourcing — doesn’t suit everyone.

2. There may be communication and cultural barriers.

Managing an offshore team is different. There are a lot of subtle nuances in culture and communication that can have a big impact on quality and deliverables. For outsourcing to work, an employer needs an open mind, a beginner’s mindset and to be comfortable re-learning some management fundamentals.

3. It’s very process-oriented.

Offshore teams can be quite process-oriented. It’s a generalization, but they can be less innovative or agile than a typical onshore team. They tend to thrive when processes are clear. This means you might need to invest in training, standard operating procedures (SOP), process mapping and clearly identify metrics and KPIs before you begin.

Conclusion

Outsourcing can be a complex skill to master. Just like running a business can take a lifetime to perfect, outsourcing is a skill that can forever evolve.

In truth, outsourcing can take a while to explore, learn and engage with. It can take time to find the right outsourcing partner and to build a comprehensive team. But having an offshore team can be a very powerful asset for your company.

Outsourcing can work for many businesses across most sectors; however, it might not be right for you and your business at this time. But it doesn’t hurt to look into it. On the other hand, if you do want to dive deeper into outsourcing, you can start today. After all, there’s no time like the present.