Outsourcing business operations to overseas companies, also known as ‘offshoring,’ is a popular strategy which many businesses of all sizes now use. It can help businesses scale up while keeping costs low, give them access to a wider network of talented professionals, and allow employees to focus on what really matters rather than completing mundane and routine tasks.
While offshoring can help with all of those things, a smooth and successful experience cannot be guaranteed. It pays to pick the right destination and vendor at the start. To have the best chance of doing so, there are a number of factors that you will want to consider. This blog will outline the most important considerations for selecting a viable offshoring destination.
Cost-effectiveness
For most companies, this is the number one benefit of outsourcing operations to other countries. There are several countries where the labour costs for highly qualified and professional people are significantly lower than they are for comparable workers in Australia or other developed economies. India, the Phillippines, and more recently Vietnam are the standout countries in this regard. This means that your budget can go further without a decrease in quality.
However, cost-effectiveness does not only include labour costs. Businesses will also have to think about exchange rates, because if these fluctuate widely then offshoring can suddenly become very expensive and it may not be easy to switch to a new country quickly. Depending on what you outsource, there may be infrastructure costs to consider too.
Talent pool
An ideal offshoring country will have a large pool of educated and skilled people working in the industry. As mentioned above, there are several countries where this is the case, so the next step from here is to find one that specializes in the operation that you want to outsource. For example, Vietnam is making a name for itself as a go-to for software development and digital marketing, while offshoring Phillippines is focused around healthcare, finance, and contact centres.
Cultural compatibility
Most offshoring vendors hire people with excellent English skills, so communication is not generally an issue. However, culture can be. How hard people are expected to work, what constitutes a valid excuse for time off or delays, and whether the client should ever be told bad news or disagreed with are all areas where culture clashes could affect business. Make sure that the culture of the vendor and the country aligns with your company’s values and expectations.
Time zone
Smart companies see moving operations to a different time zone as a benefit, for example, you could have any preparatory work you need completed overnight and ready for you by the morning, but some others forget to consider it altogether. This can cause problems if you urgently need to contact the vendor, make changes to instructions you have given them, or when you want to arrange real-time collaboration with them.
Conclusion
Selecting the right country to outsource to is a crucial decision when it comes to offshoring success. It is essential to consider the people, culture, and cost of the candidate countries to help you identify the best option for your business.
