Offshoring, over the past 30-40 years has been the go-to move that many companies have taken,to boost earnings and build a solid foundation using which they have elevated themselves.Companies like IBM, Google and many other giants in their fields have successfully used offshoring to expand their portfolios and ensure continues success. This, however, doesn’t imply that only big companies should offshore. SMEs have as much to gain by moving jobs to remote locations, as do the big conglomerates. Here are some of the basic benefits of offshoring:
Cost Savings: A 2003 estimate by McKinsey Global Institute estimates a 45 to 55 per cent cost saving when offshoring is done properly. While that number cannot be written in stone, it is a ballpark estimate that reflects the savings potential available even today when a company successfully offshores certain jobs and functions.
Focus on product development: By offshoring back-end functions like bookkeeping or I.T processes, the organisation can focus on building talent and capital towards enhancing and improving the product or service they offer. By handling the organisation’s back-end operations this resources can be spent hiring and developing the talent that it need to maximise value for cost paid, all the while taking the burden of these non-core operations off your backs.
Solving Capacity issues: Not every company can employ the right talent in the appropriate number to handle all their operational needs. Some organisations may resort to hiring unqualified personnel only because they fit their budget. In order to avoid such a situation and get value for the cost paid, it makes sense to offshore those processes that the organisation cannot fill by itself. Offshoring guarantees quality service at a low cost to ensure that your organisation runs smoothly.
Overhead savings: Hiring an offshore team to handle certain functions offers not just savings on wage costs but also savings in terms of the cost of finding the talent yourself, not to mention the time and effort saved, H.R related overheads and providing the talent with the necessary resources to perform their tasks. The offshore service provider will take care of everything from induction of the offshore personnel to their performance review so that you can focus on getting the best out of them.
Expansion: Hiring offshore resources to look after both core and non core business operations can free up organisational resources to look beyond current functioning and target new customers, develop new products or scale up the company’s operations. Companies already in the process of expansion can hire offshore teams to ensure that most of the company’s talent and resources are oriented towards ensuring the successful implementation of the plans they have put in place.
Skill Development: By offshoring routine and monotonous jobs, the organisation can focus on improving current performance of and developing the potential of its own employees. By taking these repetitive jobs off their plates, employees can be trained to handle more complex functions and take on greater responsibility, both of which positions the organisation to grow along with its employees.