what is offshore outsourcing
Only a few companies function entirely by themselves. Instead, they build partnerships with offshore contractors and offshore suppliers.
Partnering with offshore contractors (also known as outsourcing), allows companies to perform business functions more effectively and efficiently.
Nonetheless, understanding when and how to outsource offshore some of your business activities can be a tiresome task. Even just describing outsourcing itself can be complicated.
Firms normally outsource business functions in one of the following 2 ways.
- They either outsource a particular section of their regular day to day business operations
- Employ outsourcing as a general strategic portion of their business.
Apple, as an illustration of the last example, depends on outsourcing to fulfill their business operation models. The firm designs its products internally, but then their offshore contractors complete a complicated manufacturing and supply chain on their behalf.
On the other hand, if you choose to outsource the printing of marketing fliers for your firm, you are basically outsourcing a section of your firm’s daily operations.
Outsourcing is also somewhat different from offshoring since offshoring involves partnering with outsourcing firms overseas. Generally, every project that you do not want to complete in-house falls under the term of outsourcing.
How Offshore Outsourcing Works?
Outsourcing is also referred to as BPO (Business Process Outsourcing). This is the process by which a firm hires another firm or individual, either internationally or domestically, to take care of its business activities.
Over the last couple of years, outsourcing has become a respected business function which permits small to medium sized companies to gain skills and services they would normally find somehow hard to develop, because of either human resources or financial restrictions or other times a combination of both restrictions.
This means that you can still grow your firm “when and as” you need to, with or without some main investments.
Outsourcing also allows most firms to focus on their main specialties, and more importantly, cuts on budget and improves effectiveness.
As time moves by, firm owners and entrepreneurs now understand that there are lots of reasons why companies, both small and big, outsource certain business functions; even though the most famous advantage of outsourcing seems to be the simple fact that it saves a significant amount of cash.
Reduced Costs Is Where It All Begins!
Most firms and individuals who offer outsourcing services are able to execute their services for a considerably less amount of cash, since they do not give benefits to their workforce, and also have fewer overhead expenses to worry about, especially if they’re based in non-west nations such as China, the Philippines, or India.
Outsourcing also allows firms to pay attention to their key business functions while having other details taken good care of by outside professionals. A perfect example would be, understanding that telemarketing is one of the best ways you can get the word out about your new products or services you are launching (either internationally, nationally or locally) but then again accepting that it is not actually your company’s specialty.
You can easily partner with an outsourcing firm specialized in providing such services as you pay attention to preparing yourself for the endless questions resulted by the marketing campaign.
It also means that a huge amount of attention and resources on the hands of management experts can be used for more crucial and broader issues within the firm, and this is always a recommended thing.
The outsourcing firm responsible for the outsourced business functions is usually efficient and will often possess world class access and abilities to handle new technologies that a small firm simply could not afford to invest-in on their own.
Even more, in case a firm has chosen to expand its market, outsourcing is a budget-friendly way to start creating foundations in other nations too. Such business functions can be tasks such as web development, customer service, back office assistance, administrative assistance, promotions, development, manufacturing, design, sales, marketing, book keeping, accounting, and so much more.
Different offshore outsourcing services
Nowadays, offshore service providers and freelancers will fall under one of the following listed categories; in respect to the functions and services, they provide their clients. Most of them provide a number of these;
To state it simply, outsourcing will easily give away numerous business functions that you can easily get done by independent offshore agencies, making businesses stress free to run for entrepreneurs and business managers.
As stated before, besides being able to pass on these business functions to somebody more experienced in the area compared to your company (or even yourself), you’ll also save a nice amount of cash, compared to hiring some person locally or in-house to execute the same task.
That Said, let us jump onto the main section of the post.
So, how can your firm tactically incorporate outsourcing into its business plans?
This guide below will help you decide on when and how to outsource business functions for better results.
1. What should your business outsource?
The tasks and functions you choose to outsource might vary depending on your business industry.
Generally, here are 2 main types of roles that you are recommended to outsource;
The first one is tasks that are important to your business operations but then again are not a serious component of your business strategy.
Imagine, for a short moment, that your firm produces organic fruit appetizers. Despite the fact that you should deliver your products to distributing grocery stores and other various outlets, how you choose to achieve that is actually less likely to affect the individuals who finally purchase your fruit appetizers.
Given that there are slight strategic advantages to transporting the products yourself, this may be a task that you should outsource, as long as you can make sure that the deliveries will be timely and cost-effective so you can avoid unnecessary extra storage and delivery fees.
The other type of roles is commodity tasks.
Commodity tasks are also very well suitable for outsourcing. For example, most printing firms provide a range of products and services that come with immediate shipping.
In order for your firm to quickly produce business cards of equal quality as one of the best firms, your company would need to invest in advance on commercial grade printers and inks.
As an alternative, let us take janitorial services, for instance. You can either employ full time workers to clean your buildings and offices, or you can also take advantage of the economies of scale that established cleaning firms provide.
The finances that you save after outsourcing can hence get redirected to other regions of your firm.
When should your firm outsource?
One of the best ways to help you decide whether or not you’re ready to outsource a business function is to perform a cost and time evaluation. You might have responsibilities that you could possibly complete in house with the right amount of money and time; for example, let us say you finally decide to employ in-house web developers to improve your software design flexibility.
But then again, for the time being, you’ll still have to update your back-end systems and your website. To simplify things, you can outsource this task to outside contractors, with your long term objective of hiring in house developers still in your mind.
One time business procedures also work hand in hand with outsourcing. Unless you choose to rebrand, probabilities are you’ll only have to create your firm’s logo once. In case you have your existing team of workers with enough experience in graphic designs, then you can create your firm’s logo in house.
If not, it could be more cost friendly to take such a task to an experienced 3rd party so they can quickly and professionally deliver an expertly looking logo.
You can also consider the following standards as you decide on whether you’ll outsource a certain business function or not. These extra points are also intended to help you know when you are ready to outsource.
- In case the role is not one that individuals in you firm enjoy completing
- In case the skill needed is so specified that it is unreasonable to have one of your regular employees do it
- In case the activity could be completed cheaply in house, but then again it drains significant resources that could be well used elsewhere
- In case it is generally less expensive having an outside firm do it compared to having your in house staff do it
- In case the business function is a need that is only temporary or is a need that will only reappear in circles
- In case the task is an errand that only wastes needed energy and time
Like stated before, outsourcing is a reasonable option for every single task from computer services, property management, employee training, manufacturing, customer service, payroll, and so much more.