Offshoring is one of the most profitable techniques you can implement for your company. Not only does it extend your reach to more countries, but it also improves your company’s efficiency.
It’s an option that several of the largest companies in the world have employed to improve their operational efficiency. These include tech giants like Apple, Microsoft, and IBM, as well as General Electric, JPMorgan Chase, and Ford.
However, before we explore the benefits of offshoring for your business, let’s find out what it is.
What is Offshoring For Your Business?
Offshoring is defined as moving manufacturing as well as other business operations overseas. This usually results in greater efficiency and better operational profit margins. Moving operations to countries like Malaysia, or China where labor is cheaper and taxes are lower results in greater profits.
It’s as simple as that.
Offshoring and Outsourcing: What’s the Difference?
The offshoring is most often conflated with outsourcing. The key difference between the two is one of scale and type of operations. Outsourcing usually relates to internal company services like accounting, call center operations, and management being farmed out to other companies.
This doesn’t mean that operations will necessarily be moved out of the country. For instance, you can hire a law firm, or an accounting firm, or a marketing company. This will compensate for a lack of in house support and save you money.
However, offshoring relates to the physical relocation of operations to another country.
Now, let’s get to the benefits.
10 Benefits of Offshoring For Your Business
01 – Access to Skilled Labor at Lower Costs
The high cost of living in developed countries results in high average incomes for skilled workers.
Countries like Malaysia, China, and India have a large skilled labor resource available at much lower wages. For instance, you can get access to talent from India’s best universities like IIT and IIM. These are world class institutes which produce some of the best IT professionals and engineers in the world.
Also, university education is entirely in English, hence there is no communication gap. In addition, offshoring ensures that recruitment costs are all but eliminated. Since offshoring service providers have skilled workers ready to fill roles, it costs next to nothing to find them.
02 – Financial Incentives
We’ve already discussed that cheap labor and lower taxes are financial incentives for offshoring. However, offshoring helps companies save on rent, real estate costs, and even utilities.
03 – Government Incentives
Aside from the clear financial benefits, there are even government tax breaks offered for offshoring. These include long tax holidays which make it relocation more affordable. This helps maximize profits even further.
For example, India has a robust telecom infrastructure and one of the highest rates of internet penetration. This has made India one of the most attractive countries for offshoring.
04 – Continuous Operations
Through offshoring partners, it’s possible for companies to operate 24 hours in real time, regardless of time zone differences.
Since you have teams on the other side of the world, potentially, you can operate your company round the clock. Incomplete tasks can be delegated to the new shift team. Local teams can hand over complex tasks to their similarly skilled counterparts half the world away.
This ensures that continuous operations run and not a second is wasted. This doesn’t just improve the overall workflow of a company, it ensures better customer service, and an improvement in client satisfaction.
05 – Greater Operational Control
One of the great benefits of offshoring vs outsourcing is you gain more control, not less. Outsourcing involves delegating services to outside companies. This means that the quality and control of the end product is out of your hands.
With offshoring, you can retain complete control over business operations. You can issue instructions which will be followed and impart training for exactly how you do business domestically.
In countries like India, graduates are well versed in English with an advantage in communication skills. This quality gives companies a great advantage when they need complex instructions followed to the letter.
06 – Sustainable Scalability
It’s easier to scale up a company sustainably through offshoring. Beside the financial advantages that come with offshoring, there is a higher probability of retaining employees. If a key employee leaves in the middle of an upscaling operation, that negatively impacts its efficiency.
However, offshoring companies have a pool of talent that is ready to take the place of anyone who wants to go. Hence, it’s easier to upscale your business if you have financial advantages and the right talent to back you.
07 – Reaching Markets Overseas
Overseas markets are often hard to adapt to for developed nations. Meeting market demand, pulling down products and services to market competitive price points, and cultural awareness are all challenges.
With offshoring, companies already get a team of people that are locally sourced. This means they’re aware of budgets, purchasing power, and cultural norms already. They don’t require studies or statistics to get up to speed. They can organically gauge business strategies and outcomes to ensure success.
That’s not to say that studies aren’t important. It’s just that local talent is aware of what studies and reports often miss, and that’s the human element.
08 – Greater In-House Resources
By shifting operations overseas, in house resources are freed up for other projects. These can include expansion plans, developmental projects, and even investing in new departments.
09 – Remote Work Arrangement
One of the best things about offshoring is remote work arrangement. You can be in contact with your overseas counterparts no matter where they are. With advanced video conferencing technology and cloud apps, it’s become even more viable to share work across oceans.
10 – BCPs For Crisis Management
Business Continuity Plans (BCPs) are a standard feature of offshoring operations. These plans ensures that a client’s business works as usual. This means that at the core of the business, nothing will change when moving overseas. Offshoring will simply provide a cheaper alternative to the business operations. The SOPs and company culture will not be affected by the shift.
At PeritusHub we offer both offshoring and outsourcing services. You have seen the advantages of offshoring and outsourcing as well. Now you can make an informed decision about which is right for you. So, give us a call and we’ll help you decide how to take your business to the next level. Get in touch with PeritusHub.
10 Benefits of Setting Up an Offshore Team
Offshoring is one of the most profitable techniques you can implement for your company. Not only does it extend your reach to more countries, but it also improves your company’s efficiency.
It’s an option that several of the largest companies in the world have employed to improve their operational efficiency. These include tech giants like Apple, Microsoft, and IBM, as well as General Electric, JPMorgan Chase, and Ford.
However, before we explore the benefits of offshoring for your business, let’s find out what it is.
What is Offshoring For Your Business?
Offshoring is defined as moving manufacturing as well as other business operations overseas. This usually results in greater efficiency and better operational profit margins. Moving operations to countries like Malaysia, or China where labor is cheaper and taxes are lower results in greater profits.
It’s as simple as that.
Offshoring and Outsourcing: What’s the Difference?
The offshoring is most often conflated with outsourcing. The key difference between the two is one of scale and type of operations. Outsourcing usually relates to internal company services like accounting, call center operations, and management being farmed out to other companies.
This doesn’t mean that operations will necessarily be moved out of the country. For instance, you can hire a law firm, or an accounting firm, or a marketing company. This will compensate for a lack of in house support and save you money.
However, offshoring relates to the physical relocation of operations to another country.
Now, let’s get to the benefits.
10 Benefits of Offshoring For Your Business
01 – Access to Skilled Labor at Lower Costs
The high cost of living in developed countries results in high average incomes for skilled workers.
Countries like Malaysia, China, and India have a large skilled labor resource available at much lower wages. For instance, you can get access to talent from India’s best universities like IIT and IIM. These are world class institutes which produce some of the best IT professionals and engineers in the world.
Also, university education is entirely in English, hence there is no communication gap. In addition, offshoring ensures that recruitment costs are all but eliminated. Since offshoring service providers have skilled workers ready to fill roles, it costs next to nothing to find them.
02 – Financial Incentives
We’ve already discussed that cheap labor and lower taxes are financial incentives for offshoring. However, offshoring helps companies save on rent, real estate costs, and even utilities.
03 – Government Incentives
Aside from the clear financial benefits, there are even government tax breaks offered for offshoring. These include long tax holidays which make it relocation more affordable. This helps maximize profits even further.
For example, India has a robust telecom infrastructure and one of the highest rates of internet penetration. This has made India one of the most attractive countries for offshoring.
04 – Continuous Operations
Through offshoring partners, it’s possible for companies to operate 24 hours in real time, regardless of time zone differences.
Since you have teams on the other side of the world, potentially, you can operate your company round the clock. Incomplete tasks can be delegated to the new shift team. Local teams can hand over complex tasks to their similarly skilled counterparts half the world away.
This ensures that continuous operations run and not a second is wasted. This doesn’t just improve the overall workflow of a company, it ensures better customer service, and an improvement in client satisfaction.
05 – Greater Operational Control
One of the great benefits of offshoring vs outsourcing is you gain more control, not less. Outsourcing involves delegating services to outside companies. This means that the quality and control of the end product is out of your hands.
With offshoring, you can retain complete control over business operations. You can issue instructions which will be followed and impart training for exactly how you do business domestically.
In countries like India, graduates are well versed in English with an advantage in communication skills. This quality gives companies a great advantage when they need complex instructions followed to the letter.
06 – Sustainable Scalability
It’s easier to scale up a company sustainably through offshoring. Beside the financial advantages that come with offshoring, there is a higher probability of retaining employees. If a key employee leaves in the middle of an upscaling operation, that negatively impacts its efficiency.
However, offshoring companies have a pool of talent that is ready to take the place of anyone who wants to go. Hence, it’s easier to upscale your business if you have financial advantages and the right talent to back you.
07 – Reaching Markets Overseas
Overseas markets are often hard to adapt to for developed nations. Meeting market demand, pulling down products and services to market competitive price points, and cultural awareness are all challenges.
With offshoring, companies already get a team of people that are locally sourced. This means they’re aware of budgets, purchasing power, and cultural norms already. They don’t require studies or statistics to get up to speed. They can organically gauge business strategies and outcomes to ensure success.
That’s not to say that studies aren’t important. It’s just that local talent is aware of what studies and reports often miss, and that’s the human element.
08 – Greater In-House Resources
By shifting operations overseas, in house resources are freed up for other projects. These can include expansion plans, developmental projects, and even investing in new departments.
09 – Remote Work Arrangement
One of the best things about offshoring is remote work arrangement. You can be in contact with your overseas counterparts no matter where they are. With advanced video conferencing technology and cloud apps, it’s become even more viable to share work across oceans.
10 – BCPs For Crisis Management
Business Continuity Plans (BCPs) are a standard feature of offshoring operations. These plans ensures that a client’s business works as usual. This means that at the core of the business, nothing will change when moving overseas. Offshoring will simply provide a cheaper alternative to the business operations. The SOPs and company culture will not be affected by the shift.
At PeritusHub we offer both offshoring and outsourcing services. You have seen the advantages of offshoring and outsourcing as well. Now you can make an informed decision about which is right for you. So, give us a call and we’ll help you decide how to take your business to the next level. Get in touch with PeritusHub.
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