Offshore Outsourcing: How Are They Beneficial?

Every business aims to have more profit and fewer expenses. In the modern world, the business industry faces many challenges like poor economic conditions, tight competition and increasing business costs. Thus, offshore outsourcing have become a trend to businesses and companies to provide them with long-term growth and productivity.

Outsourcing is basically contracting another company or person to do a particular function. Most often, the function being outsourced is not the focus of the business. For example, a shopping mall may outsource their security and janitorial services to a security and a manpower agency. These third-party firms, security and manpower agencies are called service providers. Outsourcing comes in different forms.

The most common forms of outsourcing are information technology outsourcing (ITO) and business process outsourcing (BPO). Currently, the most common outsourced lines of business include content development, web design and maintenance, and technical/customer support.

On the other hand, offshoring simply means having a business done in another country. Some countries around the globe have become eminent in the offshore business. One of the countries that have a strong offshore business market is India. According to sourcingmag.com, Russia, Ireland, Czechoslovakia and Poland have also become popular offshoring destinations for specific types of software expertise. The Philippines, which has high literacy rate, as well as language and cultural affinities with the United States, has also become famous as an offshoring region for call center and customer support work.

Reduce Operational and Recruitment Costs

Frequently, work is offshored to reduce labor expenses. Hiring employees to local offices can have high minimum wage payments as compared to outsourcing the work to India, Philippines and other offshoring destinations which have lesser labor costs. Also, high tax rates, sick leaves, training, productivity, etc. of in-house employees must be taken into consideration. Thus, offshore outsourcing gives the originating company the benefit of reducing recruitment and operational costs.

Work Efficiency

One reason why companies often outsource their work is because of the lack of expert labor in some aspect of its business process. Offshore outsourcing allows an organization to relay a portion of its business processes to a contracted company that have the specific equipment and technical expertise – making the desired functions better, faster, and at a fraction of the cost.

Flexibility

Offshore outsourcing also gives the organization the ability and feasibility to concentrate on the more crucial parts of the business. The originating, outsourcing company can enjoy increased flexibility by investing less in certain areas of its business, most often not its strongest, allowing the company to focus on its core business. Offshore outsourcing also saves the originating company from the trouble of hiring and firing employees. In outsourcing, the risk of long-term labor contract is minimized since only the exact amount of hours needed is contracted.

Risk-Sharing

Outsourcing certain aspects of a business transfers some of the risk associated with the processes to the contracted company. Since the contracted company is a specialist, they can plan the risk-mitigating factors better.

Considering the facts written above may change a company’s current situation, giving it all the benefits simultaneously. But looking as well into its disadvantages are beneficial before the actual offshore outsourcing. To know more about outsourcing your business, visit www.virtualassistant.org.

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