Entrepreneurs: Consider Offshore Outsourcing as a Solution for Strengthening Your Business

With access to a globalized workforce, it is wise to consider hiring offshore employees to obtain the best and brightest with a budget-conscious mindset.

Offshore outsourcing involves companies or individuals outside your country performing economically beneficial tasks for the home company. I am a proud American, and I respect the idea that we should employ US residents first. Unfortunately, we have found that it is difficult to find skilled applicants who are motivated to work. Therefore, a reasonable alternative is to consider offshore supplemental workers.

Read on for tips and information about offshoring and outsourcing and if it makes practical business sense for your company.

Pros and Cons of Hiring Offshore

Budgetary oversight, education requirements, and even timezone benefits often motivate offshoring. An IT position in the US is usually 9-10x more expensive than the equivalent in countries like India, the Philippines, Eastern Europe, etc.

Hiring offshore talent comes with its ups and downs. Some benefits include:

1. Quicker scaling – Expand your team by leveraging existing companies’ skill sets for your immediate needs.
2. Lower costs – Hiring a foreign workforce is usually faster, saving time and reducing overhead costs.
3. Diverse workforce – Overseas employees immediately add diversity and unique perspectives to your everyday business problems.
4. Staff augmentation – Immediately expand or contract your workforce by leveraging existing teams.

Offshore outsourcing has several disadvantages, too. Here are a few to consider before you move any of your operations or processes overseas:

1. Lack of control—Because the team is not within eyesight or the same country code, you may be unable to track or effectively manage the team as you would prefer.
2. Communication—A change in time zones or a language barrier may delay communication, or you may need to be understood.
3. Intellectual property—An overseas company may have potential security breaches in the formulations or processes integral to your business.
4. Quality issues – There is a chance that a product made overseas may suffer quality assurance tests.

What Are the Types of Offshore Services?

Outsourcing to other countries can start with one job or a complete transfer of a process or department.

Hiring offshore virtual assistants, designers, or call center employees lets you leverage highly-trained agents accustomed to working off-hours by US standards. They can be your company’s voice when your team at home is done for the day.

Offshore outsourcing can involve hiring a manufacturing company, such as Apple, Sony, or several car manufacturers, to handle the production of your product. Labor in the US can be expensive for most companies with small margins, so offshore labor is one way to reduce costs at different steps.

Should You Offshore Your Workforce?

Offshore outsourcing and outsourcing are two different labor practices that are often confused.

Outsourcing involves buying back a business component (think production) you no longer wish to keep in-house. In this scenario, you move business practices to the process experts. When you do this, you benefit financially by hiring offshore, but you lose legacy information and the know-how should you want to move it back in-house. You can outsource to companies down the street, nationally, or internationally.

Offshoring offers an alternative. This is a more geographic-based approach, where labor costs less in countries where living is less expensive. Offshoring lets companies create products where everything is at a discount compared to the home country, then resell the product at market price to the local market. 

Offshoring vs. nearshoring is another name for offshoring to places closer to the company. Consider US companies that are nearshore to Canada or Mexico. Building a competent, talented team is critical to your business’s success. An alternative solution is to incorporate offshore outsourcing carefully.  Click here for a complimentary coaching session to frame out a plan.

Coach Dave