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Should your company consider offshoring?

Offshoring is a hot topic in the world of business. Many companies are offshoring positions, while others are offshoring entire departments. The question that many people ask themselves is whether or not offshoring can be beneficial for their company? This blog post will discuss some things to consider if you are considering offshore outsourcing as an option for your company. We will also provide some pros and cons of offshoring so you can decide which side of the fence you want to stand on!

Offshoring has become more popular over the last few decades. Many companies are offshoring positions in the customer support, human resources, and accounting departments. Some companies will offshore entire departments to locations where it is cheaper for them to operate or find qualified employees who can do their jobs more efficiently.

Companies generally decide to offshore because they believe offshoring services will save them money by outsourcing work to another country. This is a major reason offshoring has become so popular over the years and many companies rely on offshoring to help their bottom line.

What is offshoring?

production facilities

Offshoring can be defined as the relocation of business functions to offsite locations. The offshoring process is performed by a company that wants to increase its productivity or decrease costs, and offshoring consists of the outsourcing of overseas tasks.

Offshore Outsourcing has been popular for some decades now as companies have chosen this option to reduce their operational expenses. However, offshoring is not only used for cost-cutting but can also be applied to increase productivity and quality.

Offshore outsourcing services are offered in many countries around the world due to advances in technology that allow businesses to communicate with offsite teams using web conferencing tools or other communication apps like Skype or Slack channels. The most popular offshoring destinations are India, the Philippines, and China.

As offshoring is a growing trend for businesses all over the world, it’s important to know that offshoring processes involve risks like: language barriers or cultural differences, time zone issues, and even legal compliance problems among other things. These factors can affect product quality which has an impact on the business reputation.

Offshoring is a valuable tool for companies looking to increase their productivity and competitiveness, but offshoring processes must be properly managed to avoid risks that can affect the company’s results negatively.

Types of offshoring

company's home country

We will discuss some of the most popular offshoring options for businesses.

Offshore Software Development

This offshoring option is one of the most common offshoring types that companies consider today because software development allows them to outsource their IT needs abroad.

Business process offshoring

This offshoring option is when a company offshores non-core business processes such as accounting, legal services, and customer support.

Production offshoring

This offshoring option is when companies offshore manufacturing processes to manufacturers with lower costs. For example, offshoring this process often helps companies cut costs by eliminating the need to invest in local factories, inventory, etc.

Should your company consider offshoring? There are many types of offshoring options available for businesses, so you should consider all offshoring types before making your final decision.

Services offshoring

Outsourcing your services can help your company focus on its core competencies while offshoring non-core functions to service providers with lower costs.

Outsourcing Services are also an option if you consider that outsourcing can be a good way for companies to increase their productivity and competitiveness without the need of hiring local personnel, which increases operational expenses.

Pros and Cons of offshoring

domestic jobs

While the Pros generally outweigh the Cons you should be aware of both before offshoring your company’s work.

Offshoring can save you money but many factors need to be taken into consideration before deciding whether offshoring is right for your business or not.

Pros of offshoring:

  • Cost Savings
  • Availability of talent in other countries (languages, etc.)
  • Reducing stress on resources (labor, infrastructure, etc.)
  • Different skill sets and talents are needed that your company does not possess or needs growth in
  • Countries like the Philippines speak English as a second language

Cons of offshoring:

  • Communication differences can cause significant problems during the project lifecycle
  • Expensive travel could be necessary to meet with the offshoring team (but not usually required)
  • Issues with data security and privacy are possible
  • The offshored company may take on too much work causing delays in your projects or overloading their current workforce

Offshore outsourcing can be a great tool to utilize for your business but you should carefully consider all options before making any decisions. Make sure that you are aware of all the offshoring Pros and Cons before making any final decisions on if offshoring is right for your business.

Benefits of offshoring

business unit

We talked about the Pros and Cons of offshoring previously but let dive into the benefits of offshoring your business.

Offshoring is the process of offloading work to a company in another country, usually cheaper countries with lower standards when it comes to labor laws and working conditions.

The benefit of offshoring your business is that you can reduce costs by cutting back on expenses such as salaries for employees or research & development which is all offloaded to a company in another country.

If you outsource your work and for example, it is done by someone who doesn’t speak the same language as you do, this may lead to some challenges when it comes to communication but if they have been trained properly on what needs to be done then offshoring can help reduce costs for your business.

Offshoring can be a good thing if you know what you are doing and offloading work to another country is not going to lead your company into bankruptcy but it will help reduce costs for your company.

  • Is a cost-effective resource strategy
  • That can increase company efficiency
  • Allows companies to focus on core business functions
  • Helps businesses to be more competitive in the economy
  • Provides an opportunity for companies to compete outside their national borders thanks to savings from country standards and lower expenses. In addition, offshoring offers access to parts of the world with less competition and greater potential.
  • Time Zone Coverage
  • Access Skilled Workers
  • Offshore work may allow outsourcing without sacrificing operational control

The benefits of offshoring are many but there are also some challenges that you might face if your company decides to outsource work. There may be language barriers or cultural differences when outsourcing work so this could present an issue for the business relationship.

What major companies offshore?

manufacturing jobs

Outsourcing isn’t a new concept, many companies have been doing it since the early 90s. Today, many companies are looking to offshore some of their work because it is a chance for them to increase revenue and at the same time cut costs.

Below is a shortlist of companies that offshore work.

 

  • General Electric
  • Ford
  • Microsoft
  • IBM
  • Apple
  • Nike
  • Cisco Systems
  • Wal-Mart
  • American Express
  • Verizon
  • Comcast

I am sure you noticed this list is of some pretty big companies, but outsourcing is not exclusively for them, many small and medium companies offshore work. For smaller companies, it’s popular to offshore customer service, telemarketing, accounting, data entry, transcription, and much more.

Expansion and Growth

manufacturing jobs

When you offshore to a foreign country (like the Philippines) it’s great for cutting costs, but in the big picture, it’s really more about growing your company and expanding within the same country, new markets, and international trade.

If your business is looking for expansion and growth, outsourcing some of the work you are doing may help. Outsourcing allows companies to focus more on their core competencies by offloading certain activities while still maintaining control over customer service or other areas that allow them to keep growing at a steady pace.

The last part about expanding into new markets is one of the biggest benefits that companies get from offshoring. If you are looking to expand your company outside its national borders, offshore work can help pave way for new opportunities and expansion since there might be less competition in these foreign markets.

Outsourcing allows businesses to have better control over costs while still being able to compete in a global market.

When you offshore to low-cost countries you can find a highly skilled workforce that allows you to cut costs while not compromising on quality.

Expanding your workforce can be a good thing for your company, but the employees you hire must be skilled and efficient at their jobs otherwise they could cause more problems than solve them.

Offshoring provides access to parts of the world with less competition and greater potential.

Ready to get started?

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Email: info@mysourcesolutions.com

Phone Number: 844-468-3330

MySource is one of the Top BPO Companies out of the Philippines but with our Headquarters in Kanas City. We love helping companies save money, expand and increase productivity. If your goals align with ours please reach out.

Content

  1. What is offshoring?
  2. Types of offshoring
  3. Pros and Cons of offshoring
  4. Benefits of offshoring
  5. What major companies offshore?
  6. Expansion and Growth
  7. Ready to get started?

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Additional KW (services offshoring, production offshoring, imported services, developing world, current government data, developed countries, lower labor costs, western countries, many developing countries, new jobs, foreign locations, operational functions, low wage countries, production facilities)