The benefits of offshoring

Sep 9, 2014SHORE Blog

Offshoring has become a huge global industry in the 21st century, bringing a multitude of benefits to those who seek and those who provide offshoring services. Does offshoring refer to the business process outsourcing (BPO) industry? Not quite. Some people interchange the terms “outsourcing” and “offshoring,” but these two terms are slightly different from one another.

“Outsourcing” is hiring an external company to do work outside your company, while “offshoring” goes further by having the work done outside your country. In other words, not all outsourced work is offshored, but all offshored jobs are also outsourced. Outsourced work could even be done in the same province or state as your own, or anywhere else within your own country.

More and more companies worldwide — not just large ones, but even small and medium organizations – are offshoring their functions to providers in other parts of the world.

The following are among offshoring’s many benefits to companies looking outside their countries:

Reduced cost, time and effort. Back office functions and functions that require advanced, time-consuming skills such as accounting or animation are frequently offshored. Offshoring provides remote employees thereby reducing overhead from renting or owning physical space. Offshoring providers also provide virtual offices, as required. On the other hand, greater savings on costs is not the only important factor in decisions to offshore services.

Solution to skills shortage. Companies are sometimes constrained to offshore services because their own countries simply do not have enough people with the available skills who are willing to do particular jobs. For example, medical transcription and validation are laborious processes that require a certain level of skills. With much work to be accomplished, companies choose to send the work to offshoring providers abroad that have a larger pool of skilled and semi-skilled workers to have projects done without backlogs, and within rigid timeframes.

Achievement of business strategy. Offshoring is no longer just about cost-cutting, but about executives and decision-makers realizing and wanting to seize offshoring’s other benefits such as improving customer satisfaction, expanding into other markets, and taking advantage of the international economy’s opportunities.

Concentration on core business. Offshoring enables companies to concentrate on their core business by freeing up time and resources while providers provide quality work, often for functions requiring a significant supply of labor. Management responsibility over employees is transferred to the offshoring providers.

Marketing diversity. The offshoring provider brings diversity and fresh ideas to a company’s marketing approach. Increasingly, offshoring providers undertake social media marketing through the web, telecommunications and other media.

Companies that decide to offshore realize that many functions can be done by providers who aren’t based in their own countries, thereby maximizing the companies’ productivity.