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Top 8 Benefits of Offshoring

offshoring benefits

There are a number of misconceptions about offshoring services: For example, many executives assume offshore workers have minimal skill sets and limited knowledge of English. These misconceptions are not inherently true, and can make businesses miss out on offshoring benefits.

Many Americans believe that offshoring is taking jobs away from the US economy. In reality, offshoring is helping the American economy, not hurting it by helping businesses remain more competitive thanks to reduced labor costs. Business owners, like you, for example, unlock cost savings, and enable diverse insights that spark innovation thanks to different perspectives.

In this article, we’ll discuss the advantages of offshoring and debunk some common misconceptions.

What’s the Difference Between Offshoring and Outsourcing?

With outsourcing, you hire someone from outside the company to support your business. IT is the most commonly outsourced function, but companies outsource many other business processes (also known as business process outsourcing, or BPO).

Offshoring is a form of outsourcing, but outsourcing is not always offshoring. There are three different types of outsourcing.

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  1. Onshore outsourcing involves a company hiring external employees who work in the same country.
  2. Nearshore outsourcing happens when a business hires external employees who work in a neighboring country.
  3. Offshore outsourcing provides organizations with skilled labor from distant or overseas countries.

Companies are increasingly using all types of outsourcing. In 2022, 66% of American businesses outsourced at least one of their business operations. You can independently hire an outsourced worker or partner with an organization that helps you find the best talent, like Remote Employee.

A large amount of modern outsourcing is nearshore or offshore. This trend shows that business owners see numerous offshoring advantages, and saving money is just the tip of the iceberg.

Types of Offshore Outsourcing

There are two main types of offshoring. You can choose one or both of them depending on your business requirements.

  1. Production offshoring is when a company relocates physical processes to an offshore location. Examples include manufacturing, logistics, and software development.
  2. Service offshoring occurs when a business redirects services to its offshore employees. Examples include customer service, telemarketing, and cold calling.

There are advantages and disadvantages to both options. In both cases, your business can save on labor costs, but delivery time may increase if your products travel further.

Ultimately, your company must determine what is an advantage of offshore outsourcing that outweighs possible disadvantages.

Pros and Cons of Offshoring Labor

While there can be speedbumps when you begin offshoring, most stereotypes about offshore workers are untrue. Many executives raise some of the following concerns about offshoring talent.

1. English-language Proficiency

Language is one of the most common objections to labor offshoring. Yet, it is not completely true. For example, the Philippines ranks 22 out of 111 countries on the English proficiency index—what’s considered a high ranking.

Many Filipino citizens speak English as their first language. The same is true for workers from India and many African countries. Language barriers are much less of a problem than American executives often assume.

2. Lack of Industry Knowledge

Offshore workers have experience in important roles from marketing to IT services. You will be able to find workers who understand your industry. Like when you’re looking to normally hire, you must select workers who fit your business goals.

There is a stereotype that offshore workers can only do “low-skill” tasks like cold calling and data entry. Offshore employees can perform these roles, but they can also do much more.

Offshore talent can also help with tech support, accounting, healthcare administration, and more. This list is increasing with American labor demands and because education is becoming more accessible.

3. Little to No Contact with Headquarters

An increasing number of offshore agencies let you contact your workers directly. Good BPOs will let you manage and select your offshore team. In many cases, you can regularly check on your offshore operations for efficient quality control.

Offshore employees are not “ghosts.” You can integrate them into your core business however you see fit.

advantages of offshoring

Credit: Mikhail Nilov

The Top 8 Benefits of Offshore Outsourcing

Offshoring benefits outweigh the costs for most organizations. Small- to medium-sized businesses can easily fill skill gaps and save costs. Enterprise businesses can increase productivity and expand to new locations.

American companies are currently experiencing high turnover rates. Offshore employees typically stay with you for longer while providing numerous other benefits. The following list showcases the top eight reasons why business owners benefit from offshoring.

1. Financial Incentives

Some countries offer tax breaks to foreign companies that boost their economy. These tax breaks make relocating operations more affordable. Additionally, it helps you save taxes on real estate costs for your warehouses or offices.

2. Decreased Operational Costs

Maintaining labor and real estate costs can consume a lot of your budget. Offshore workers require a lower salary, and office space is not required. You also are not required to pay as much for Social Security Benefits.

Try this cost reduction calculator to see how much you could save with offshoring.

3. Wider Access to Skilled Labor

One of the biggest offshore outsourcing advantages is a larger talent pool. With offshoring, you are not limited to workers near your head office. Foreign employees can also offer insights into different business practices.

These new insights foster innovation and help you scale your business in their home countries.

4. Better Service in Every Time Zone

You cannot expect onshore employees to work off-business hours. A major offshore advantage is that your off hours could be their business hours. Offshore employees help you deliver service across time zones and on a 24/7 basis.

This expansion will increase customer satisfaction because people can reach your center anytime. It also lets you effectively scale your business to regions with a significant time difference.

5. Less Paperwork

Many countries have fewer regulations than the US. As a result, you can save time on procedural paperwork. However, there is usually some paperwork required to open your overseas departments.

6. Increased Productivity

Offshore labor saves your onshore team’s time. Trusted offshore employees can perform many of your company’s daily maintenance tasks. This way, onshore employees can deal with irregular operations, like mitigating a security breach, without any slowdowns.

7. Less Training Time

An offshore employee is typically already trained to perform their role. Therefore, you do not have to spend time training them. Although, you will still need to teach them about your company. Most offshore workers are eager to learn and will adapt quickly.

8. Increased Opportunities

Offshoring to developing countries gives disenfranchised workers new opportunities. You can also increase your company’s outreach to these countries. Therefore, offshoring can improve your brand’s social responsibility image and increase growth.

Take Advantage of Offshore Outsourcing with a Trusted BPO Partner

Experience all the advantages of offshore outsourcing by partnering with Remote Employee. Our offshore talent pool covers more than 600 different roles—we know you’ll find the talent you need.

With our 97% client retention rate, we know firsthand the importance of keeping our customers happy with their offshore workforce. We will help you find the right match for your team and help you connect with them without server lag issues.

We’ll do the heavy lifting to get your business approved overseas. You won’t need to worry about any legal “red tape” when you open a new foreign department.

Book an appointment for a remote employee consultation today.

Featured Photo Credit: ArturVerkhovetskiy