Everybody’s talking about offshoring lately. And with good reason; it’s one of the most exciting opportunities in the market, and it’s disrupting businesses at every level.
Here are some ways you can use offshoring to disrupt your industry:
If offshoring is an appropriate model for your business the best time to start offshoring is right now. You’re ideally positioned to join the disruption and get the benefits (before your competitors do).
It’s easy to get confused when you hear the word, “offshoring”. That’s because, although the practice itself has evolved a lot over the past decade, the language we use to describe it hasn’t.
As a result, all the different offshoring approaches tend to get mixed in together. So, when someone says, “Oh, outsourcing... tried it... it didn’t work for me,” what they’re really saying is, “The type of outsourcing we tried wasn’t right for my needs.”
The reality is, there are four distinct offshoring models, and they couldn’t be more different from each other. And understanding them is key to choosing the right one for your business.
Which one - if any - is right for your business? Let’s explore the models in more detail.
This is where you pay a freelancer overseas to complete a project for you. You might use this offshoring model if you’re working with a limited budget, because an overseas contractor can be significantly more affordable than their local counterparts with the same skills.
The key thing to note here is that your freelancer is not full-time or dedicated to your business. While they complete your projects or retainer work, they’ll also work for other businesses and projects. Think of them as an overseas contractor.
Traditional outsourcing is when you pay a provider to do absolutely everything. They recruit and manage your employees, handle all facilities and infrastructure, and manage business processes, productivity and work quality. In other words, you hand over the keys and tell your BPO to drive the whole thing.
This is where you physically go to another country yourself, and incorporate a company to function as an offshore division of your business. Where you do all the setup yourself including incorporation, facilities, security, infrastructure, telecommunications, recruitment, HR and payroll. Plus you manage day-to-day work quality and productivity.
This model of offshoring involves:
This is where you set up a dedicated team overseas, where labor is up to 70% cheaper. But you get a local specialist to handle facilities, recruitment, HR, IT support, legal knowledge and infrastructure, so you can focus on what you’re good at: day-to-day work quality and productivity.
You retain full control of your business processes, and fully integrate your offshore team into your business. Much as you manage your existing onshore team. Managed services offshoring means you get an experienced partner on the ground to handle basically everything your offshore team needs. And you supply the systems and processes to ensure high quality work and productivity. It’s up to you how you manage your offshore team.
This is the model that MicroSourcing uses.
While most businesses can benefit from some kind of offshoring, it’s definitely not the right model for every business. There are potential savings and benefits, but you need to commit time and effort to making it work. You need systems and processes so your offshore team can confidently work in your business. And you need to make sure your business is a good fit for the model.
What to consider when choosing the right model for you:
If you only need work for projects here and there, or you only need someone to work part-time for you, you don’t need a dedicated offshore team. At least, not yet. But if you need full-time, dedicated staff and want to partner with a trusted partner on the ground, it’ll be one of the best things you do for your business.
A smart way to increase profits in your business is to cut your expenses in a way that won’t negatively impact your revenue. So look at your numbers. Find out exactly how your business is performing and what your biggest expenses are. If you’re like most businesses, you’ll already know, without looking, that your biggest expense is labor.
Offshoring has opened up an exciting new opportunity for many businesses to significantly lower their labor costs, without losing skills or impacting quality. Offshoring can also reduce your onshore fixed costs. A lot of business owners take fixed costs (like rent, facilities, electricity, and so on) for granted. But these costs definitely matter, especially if you’re trying to scale your business.
The Philippines has a very similar culture to the U.S. Culturally, Filipinos are quite similar to Americans:
Many businesses are concerned about offshoring to the Philippines because they believe the technology won’t be up to the high standards of Western countries. That’s a myth. In fact, the Philippines has very similar technology to the U.S.
The Filipino government invests heavily in infrastructure, particularly in the cities; Manila, for example, which is a home to a lot of large corporate facilities. The main thing to be aware of when offshoring to the Philippines is the typhoons that come through every year. This can cause outages for businesses that aren’t prepared. When looking for an offshore partner, look for one who has invested in world-class redundancy infrastructure and business continuity processes - a partner who can quickly and affordably move teams and facilities to entirely different buildings if necessary. This means maximum uptime for business operations, even during natural disasters.