Offshore outsourcing is when a business outsources jobs, particularly customer service and technical support, to an organization and location outside their home country.
1: Cost Savings
Offshore outsourcing offers companies a chance to keep costs down without sacrificing quality. This can be a great strategy of offshoring development of organizations that want to boost their bottom lines as well as increase their profits through cost reductions or increasing volumes at lower prices.
2: Employee Freedom
Offshore outsourcing allows employees to work on their own time and schedule, means far less over-working and better quality service.
3: Good Manpower
Offshore outsourcing gives a company the opportunity to have a broader search for top talent which can lead to creative ideas and solutions to business problems. This can also be used in the hiring of technical staff or even marketing personnel.
4: Lower Costs
Overhead costs are greatly minimized when outsourcing jobs to an organization outside of their home country. In addition, this strategy of offshorinvolves international collaboration and relationship building which can lead to more local marketing options for clients as well as more potential for future sales.
5: Focus
Offshore outsourcing allows a company to focus on what is best for their organization by reducing the number of distractions in the office while increasing control over their business.
6: Growth Potential
Offshore outsourcing can be an effective strategy for expanding markets overseas and establishing a niche in foreign markets where there is a booming demand for products or services.
7: Fast Results
Offshore outsourcing can be fast, efficient and profitable with little training required on the part of individuals, which means minimal time wasted on manual labor when compared to traditional work processes.
The trend of using offshore outsourcing for business process outsourcing (BPO) has waned since its height in the early 2000s. In 2014, there was a 20% increase in the number of BPO jobs in the US alone. This shift is mainly due to developments in information and communication technology, which has made it possible to do more work outside of the confines of an office space.
Offshore outsourcing is sometimes confused with offshoring, which exists when a company creates or expands a division outside their home country, typically by moving their corporate headquarters to another country. Many companies do this when they want to take advantage of a cheaper labor market.
Offshore outsourcing allows for cost savings, employee freedom and a broader search for talent and it can lead to more local marketing opportunities. However, the advantages and number of possible advantages of offshore outsourcing outweigh the costs involved in hiring offshore support staff or setting up an offshore call center. This can be true even if doing so will lead to lower quality service.
Conclusion
Offshore outsourcing benefits and drawbacks are somewhat dependent on the current competitive environment in which a company finds itself. Companies that compete in niche markets may find that they do not need to outsource and can compete effectively in their local markets. However, companies that face a highly competitive global market and are forced to continually re-structure their business processes, as well as deal with changing consumer demands and needs, are more likely to benefit from using offshore outsourcing.
