What is offshoring? Is it the same with outsourcing?
Offshoring, also known as offshore outsourcing, refers to the delegation of services to a country from a different region. Usually, businesses in the US and the UK either delegate one-off projects or an entire department to countries miles away from them.
Most people use outsourcing and offshoring interchangeably. While offshoring can be called outsourcing at some point, outsourcing is not always done offshore. This is since the latter is an umbrella term for delegating services, whether locally, in a nearby country (nearshoring), or offshore.
What countries can I turn to when delegating offshore?
You can try offshoring your services to a destination that specializes in certain functions. Some of these destinations include:
- India – India remains to be a leading offshoring destination for IT and development services. U.S. companies prefer the country due to its low costs, high-quality services and 24/7 support.
- The Philippines – The Philippines complements India’s IT expertise with its customer service and back-office specializations. Companies prefer to outsource in the location due to its solid cultural compatibility, hospitable employees and competitive workforce.
- South Africa – With its rising popularity, South Africa is poised to be the next offshoring powerhouse competing with India and the Philippines. The country is known for its world-class infrastructures and the level of care to customers.
- Eastern Europe – Eastern Europe is an ideal nearshoring and offshoring destination for software development and IT-related services. Destinations in the region such as Ukraine and Poland are known for producing talents with years of expertise in handling IT-related work.
Can offshoring benefit me in 2023?
Indeed, offshoring can provide you with more advantages than simply cost-cutting. Here are some key benefits that you can get by hiring offshore staffing:
- Access to specialized experts. Companies don’t have to be restricted to their home countries when looking for suitable talent. They can hire highly-skilled experts with years of expertise from different locations.
- Government incentives. Most offshoring destinations get full support from their local government agencies. BPOs and their clients usually get tax incentives and duty-free imports as a way to attract foreign investments in these countries.
- A better way to scale. Offshoring is also a better way to scale a business more efficiently. A $10,000 investment can go a long way with the cheap labor and operational costs in offshore destinations, helping them to maximize their profitability.
- Encouraging business continuity. Lastly, offshore staffing won’t easily be affected by calamities and crises that their source country faces. With this, companies can still operate as usual without interruptions.
What challenges could I face?
Despite the huge advantages, businesses can still face several challenges in offshoring their services, especially in countries with rising popularity. However, they can still work around the following disadvantages when needed.
First, language compatibility can still be a hindrance for companies offshoring in countries like Vietnam and Malaysia. Having average proficiency rankings, these countries are finding ways to improve English proficiency, especially in the workplace. Clients also face issues in cultural compatibility when working with a team.
Lastly, concerns on data security and compliance still arise. Since clients are located miles away from their teams, they have less control over their operations, further exposing them to data breaches and intellectual property concerns.
How can I get offshoring right?
While offshoring your functions can be easy, it requires thorough planning to get this right and avoid experiencing disadvantages. Here are some ways you can get offshoring right:
- Prepare your plans and processes – Firstly, have your outsourcing plans and processes in place. Preparing your processes sooner can help your team have a better understanding of what you expect from them and how their tasks should be done.
- Get to know your preferred destination – It pays to get to know a lot about your preferred offshoring destination. Go beyond their costs; analyze everything you need to know, including their English proficiency, work ethics and specialization.
- Choose a suitable service provider – The same standards in choosing a destination should also apply to your service provider. A simple Google search about an outsourcing company gives you more information about their pricing, services, ranking and customer reviews.
- Establish communication with your outsourcing partner – Lastly, establish proper communication with your outsourcing partner especially while you’re working with your team. This helps you work on any challenges encountered by your team and reach out for updates and changes on your system.
Now is always the best time to offshore your functions. Once you’ve started planning and analyzing the costs you can save in the long run, you only have to book a consultation with your service provider to get started.
Offshoring companies are there to guide you with your needs and requirements when delegating your services. With their years of experience in the industry, you can assure that you can get the best out of your team.