Offshore outsourcing definition Offshore outsourcing definition
Offshore outsourcing, also referred to as Business Process Outsourcing (BPO), is the process of having work done for your business using qualified staffing solutions from countries with lower labor costs. About offshore outsourcing Offshore outsourcing definition About offshore outsourcing Benefits of offshore staffing Offshore outsourcing examples Offshore vs onshore outsourcing Offshore outsourcing pros and cons Pros of offshore outsourcing Cons of offshore outsourcing Offshore outsourcing Philippines Types of offshore outsourcing
Offshore outsourcing, also referred to as Business Process Outsourcing (BPO), is the process of having work done for your business using qualified staffing solutions from countries with lower labor costs.
Commonly IT, sales, and administrative roles are carried out for businesses across the world from countries such as the Philippines and India.
Companies can benefit from accessing other countries that have more resources for people with specialized skills. One popular example of offshore outsourcing is customer service through call center companies. These BPO companies offer quality customer service at a much cheaper rate than hiring locally.
Like nearshore outsourcing, companies prefer having minor tasks outsourced so that the in-house team could focus on the vital functions of the business. One perk of offshore outsourcing for businesses is that they do not need to think about the overhead expenses for the benefits of additional in-house employees.
Overall, the company could benefit from lower human resources costs, equal or higher-quality outputs, and higher profits. Benefits of offshore staffing
The world is becoming increasingly globalized. Technology, software and communications improvements now enable easy access to a globalized workforce. This has many advantages, but the primary benefits of offshore staffing are that: You can significantly cut costs (typically saving 60%-80%)
Access large pools of highly qualified and highly capable staff
Source staff from across the globe instead of being limited by the local population
The benefits of offshore staffing impact small, medium and enterprises across the globe. These businesses can access more affordable resources to help streamline and grow their business. This is a win-win for all parties involved. Offshore outsourcing examples
Companies turn to offshore outsourcing for cheaper wages and better quality work. Just like nearshore outsourcing, companies prefer having minor tasks outsourced so that the in-house team could focus on the vital functions of the business.
One popular example of offshore outsourcing is customer service through call center companies. These BPO companies offer quality customer service at a much cheaper rate than hiring locally. Offshore vs onshore outsourcing
The opposite of offshore outsourcing is onshore outsourcing, which is the practice of outsourcing your business functions and non-core teams to a BPO firm in the same country where the business operates. It is also commonly referred to as “domestic outsourcing.”
Unlike offshore outsourcing, the business does not save as much on employment costs – which is the main reason why businesses turn to outsourcing in the first place.
Since the outsourcing provider is in the same country, both companies will have the same cost of living and labor laws applied. However, with onshore outsourcing, you wouldn’t have to deal with cultural and time-zone differences. Offshore outsourcing pros and cons
Companies can turn to offshore outsourcing for almost every business role – whether they’re in need of customer service teams, virtual assistants, bookkeepers, graphic designers, IT consultants, and more.
Further, before diving into the world of offshore outsourcing, it’s best to be informed of its pros and cons. Pros of offshore outsourcing Substantial savings
Access to a flexible, diverse, versatile, and proficient offshore team
Experienced and competent team leaders will guide your remote team
Diminished cost and less legal responsibilities (because your outsourcing provider will take care of everything) Cons of offshore outsourcing Occasional delivery delays
Time zone and cultural barriers
Possible disclosure of confidential information Offshore outsourcing Philippines
The Philippines is the leading offshore outsourcing destination in the world. With 1.3 million BPO workers and counting, large corporations and even small to medium-sized enterprises all over the world trust that their Filipino workers and remote teams can provide excellent outputs, customer service, or IT assistance at a cost-effective price.
Outsource Accelerator provides you with the best customer service outsourcing companies in the Philippines, where you can save up to 70% on staffing costs. We have over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2500+ BPOs… all designed to make it easier for clients to learn about, and engage with, outsourcing. Types of offshore outsourcing
Here are some types of offshore outsourcing, as listed by Rezaid: Production offshoring
The actual movement of the physical manufacturing process overseas, generally at a significantly cheaper cost in terms of personnel and materials, is known as production offshoring.
Front-office and back-office processes and functions are the two primary types of offshored processes and functions. Customer service, inbound and outbound telemarketing, virtual assistants, and technical assistance are all examples of offshore.
HR and recruiting, accounting and bookkeeping, mobile and web development, and design and graphics are other examples of production offshoring. System services offshoring
Information technology (IT) will be a key subject to get right given the multiplicity of procedures and minute-by-minute activities of any corporate operation.
In the 1990s, a huge amount of communication infrastructure allowed nations like India, which has a big pool of English speakers and a technically skilled workforce, to lead the sector by luring companies like HP, IBM, Microsoft, Oracle Corporation, Intel, and Cisco. Innovation and software offshoring
In computer science and software development services, Asian countries lead the world. High-tech product companies, including those in Silicon Valley, have begun to offshore innovation work to Colombia, Belarus, South Africa, Mexico, and Ukraine.
Using these countries' highly trained labor pools results in considerable cost savings and faster production cycles. Reshoring
Reshoring, also known as back shoring or inshoring, is the opposite of offshoring. Companies like Google, Facebook, and Amazon have been criticized in Europe for allegedly concealing income and avoiding taxes. They reportedly did this by booking non-US earnings from major advertisers through its Dublin branch in low-tax havens like the Republic of Ireland.
As a result, it started in January 2018 that it would book those earnings and pay the taxes on those profits in the countries where they were generated.
What is Business Process Outsourcing (BPO)? What is Business Process Outsourcing BPO?
Business Process Outsourcing (BPO) is the engagement of services from a third-party provider. BPO uses various technology-enabled services to hasten the delivery of services. The business activities could be back-office such as, but not limited to, payroll, accounting, human resources, or front office jobs like customer service, sales, and marketing, etc. In the case of content providers, these business activities could mean hiring writers, remote editors, or virtual assistants.
BPO speeds up processes and enhances efficiency. Companies that outsource some of their business activities use their time on core services and competencies. With this shift in focus, companies improve their current processes that may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies. Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so. How does Business Process Outsourcing work?
When a business engages an external specialist to manage and operate some of its internal processes, it's referred to as business process outsourcing. Such ‘processes’ include customer service, accounting and finance, or sales. It is different from hiring an agency to do specific tasks, as the outsourcing provider (BPO) is more concerned with the ongoing production of labour-intensive tasks, instead of the higher-level strategy and guidance.
Now, business process outsourcing has broadened and is more akin to staff augmentation, or staff leasing. What are the benefits of business process outsourcing?
There are many benefits to outsourcing, as well as some downsides and risks. The common benefits include: Cost savings: significant savings of up to 70%, leveraging the lower global salaries Global market: access to a bigger employment pool of talent Global presence: having operational across the globe increases trade opportunities Flexible workforce: reduces internal local labour and employment compliance obligations Leverage skill: leveraging the skills of other specialist companies Focus: enables the client company to focus on their core functions
Business process outsourcing examples
The business process outsourcing sector is a vast industry, generating over $200bn annually, and employing many millions of people worldwide. Some examples include: Big enterprise
Facebook and Uber outsource many of their operational functions, including content moderation for Facebook, and customer service for Uber Medium-size businesses
A medium business with 50-500 staff might outsource the labour-intensive accounting and finance functions to a team in the Philippines. Small business and entrepreneur
It is common for small business owners to have a Virtual Assistant (VA) working for hem full time, remotely from the Philippines. What are the different types of BPO?
The type of business process outsourcing can be characterised by their specialisation, location, and size. Generalist or specialist BPOs
Business process outsourcing is in the human resources and professional services sector. However, their services extend across all industries. The majority of BPOs are generalist, in that they offer a full range of professional services, although some specialise in certain verticals (ie accounting, or animation). Location
Business process outsourcing typically operates form developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost-of-living and bigger populations. Different locations offer different advantages. Size of BPO
The bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people. Functions of business process outsourcing
Collectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include: Finance and accounting: operational, technical and specialist functions Healthcare: various functions of the backend of the healthcare and health-insurance industries Creative and content: everything from post-production of Hollywood movies to newspaper and website content Tech, IT and development: network management, web and app development and maintenance Sales & customer support: ongoing sales and customer operational support and delivery Marketing: ongoing marketing, communication and branding activities Talent and HR: externalising the management of company HR, recruitment and compliance Administration: general business administration and operational activities Top BPO companies in the world's top outsourcing hubs
A wide range of BPO companies in different parts of the world provide utmost services to their Western and local clients. Many of them have even earned awards and recognitions by award-giving bodies due to their performance on both the roles they take and on their way of taking care of the employees.
Check out the top BPO companies in several outsourcing destinations below: Top BPO companies in the Philippines Top Indian BPO companies Top South African BPO companies Business Process Outsourcing (BPO) services
Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 4,000 articles, 200+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with, business process outsourcing.