Offer
The workplace is not an insulated space. In the globalized world that we live in, global hiring trends show a tendency to offshore hiring practices. And when the statistics come to light, it’s not a surprise that this practice is gaining growing traction. According to a study, almost
“…70% of business recruitment expenses are cut off due to effective offshore practices.”
But since these savings statistics depend on a range of factors, it can be quite difficult to work out. To help companies assess the potential savings from offshoring, DigitalHire has developed a user-friendly Offshore Hiring Savings Calculator. Just plug in the country you want to outsource in and job specifications and it will estimate the potential cost reductions associated with offshoring your operations.
But before we jump into other things, let’s define our terms first: What is offshoring? Offshoring is the practice of outsourcing business processes to a third-party company located in a different country. As we discussed before, globalization has a lot to do with this. With worldwide connected markets it’s easier for businesses to explore opportunities beyond their domestic borders.
Technological advancements have also largely facilitated remote collaboration and communication. Moreover, the pursuit of cost-effective solutions has driven many businesses to seek lower labor costs and operational expenses in offshore locations.
Naturally, offshoring has notable implications for recruitment procedures. In this blog, we will talk about the key benefits associated with offshore hiring. Simultaneously, we will take note of some challenges as well and how they can be curtailed. Lastly, we will look at two success stories and take lessons from their approach.
Key Benefits of Offshoring
Cost Savings
One of the most significant advantages of offshoring is the substantial cost savings it offers. This is primarily driven by the lower labor costs prevalent in many offshore locations. Let’s take some examples: countries in regions like Asia, Eastern Europe, and Latin America often have a lower cost of living. Although this is in relation to developed countries, this competitive edge usually translates to lower wages for skilled professionals.
This reduction naturally makes way for potential savings in overhead expenses. These overhead expenses can include things like rent, utilities, and maintenance for the workspace. Additionally, they can reduce expenses related to employee benefits. Since benefits like health care and retirement plans are attractive incentives, offshore hiring would be beneficial for you since these costs may be different in such locations.
Furthermore, offshoring can lead to infrastructure savings. Now you might be wondering what that might look like. Well, for starters, by outsourcing certain functions, you can avoid the need to invest in specialized equipment, software, or facilities. For instance, you might choose to offshore your customer support operations to a location with existing call center infrastructure. With the building already made for you and tailored to your needs, you don’t have to worry about spending more. This can result in significant cost savings over time.
Access to a Global Talent Pool
Another notable benefit of offshoring is the access to an offshore talent pool. The crux of this benefit lies in its diversity: professionals, from multiple backgrounds, skill sets, and experience, would come together to contribute to your business. To know more about the indispensability of diversity in the modern working environment, check this out!
When companies offshore, they gain access to a vast array of talent from around the world. Offshore hiring can open doors that are customized to your company needs. And the needs can be as qualified as you want them to be. Whether you need developers with specific programming languages, designers with specialized software, or customer service representatives with fluency in multiple languages, you can always find the right talent to meet your needs.
But it’s not just about the quantity but also about the quality. Although this equally applies to all companies and businesses, it is especially true for those industries that require a more sophisticated portfolio. Whether it’s artificial intelligence, machine learning, or biotechnology, you don’t want any person to walk into your company. You want the best and deserve the best! Hence, by partnering with offshore providers, businesses can access experts who may be difficult or impossible to find in their local market.
Connected to this point is the opportunity to penetrate niche markets. As Time Doctor states:
By leveraging such talent and expertise, you can tailor your products and services to meet the specific needs of diverse customer segments. Consider the offshore employee as a spy on your behalf who is collecting valuable information for you. With this, you can expand your market reach, increase revenue, and gain a competitive edge.
Increased Productivity and Round-the-Clock Operations
We briefly hinted at this previously but let’s talk a little more about leveraging time zone differences to achieve round-the-clock operations. As you would already know, this will enable you to provide continuous customer support, process transactions, and develop products without interruptions.
Let’s understand this through an example. Let’s say your company is based in the United States. You’re looking for a customer support team and you want to utilize them by managing offshore teams. Now, you might be considering either India for this. That wouldn’t be surprising since India seems to be the most attractive space for outsourcing right now!
So, if you create your team, now the U.S. team could be sleeping, while the offshore team can be working on tasks that require immediate attention. Whether they are in relation to troubleshoot issues or customer inquiries, someone is always there to sort things out.
Naturally, round-the-clock operations can lead to increased productivity and efficiency. According to Clutch:
“Nearly one-quarter of small businesses say they outsource to increase efficiency.”
By having teams working in different time zones, you can maximize your resources and minimize downtime. Customer relationships will constantly be nurtured and very rarely will they have a complaint that isn’t immediately addressed. Your CRM would shoot up in no time!
Furthermore, the ability to operate 24/7 can give you a competitive edge. As is expected in today’s fast-paced global economy, customers expect quick responses and efficient service. By being able to provide support and assistance around the clock, you can differentiate yourself from your competitors. This reasoning follows a simple principle: A stronger customer relationship means a stronger business.
Challenges of Offshoring
Cultural and Communication Barriers
Collecting the cream of the crop does come with some caveats. The first of these is the cultural and communication barriers. Such instances can hinder effective collaboration, productivity, and overall project success.
Let’s focus on language barriers first. Even when team members have a basic understanding of each other’s languages, nuances and subtleties can be lost in translation. As expected, such communication gaps can lead to major misunderstandings and misinterpretations. And it’s not only regarding work communication but the entire work environment altogether.
As for cultural differences, different cultures may have varying expectations regarding communication styles, work ethics, and time management. So, while some may connect with others through assertive communication and joking, others might be highly uncomfortable with it. Though they may seem minute, such differences can lead to misunderstandings and conflicts if not addressed effectively.
Now that we have discussed the importance of dealing with these problems, here are some effective strategies for overcoming cultural and communication barriers in offshore relationships:
- Invest in language training: Provide basic language training for team members to improve their understanding of each other’s languages. Although this is a long-term agenda, it should at least be on your to-do list.
- Use professional translation services: Utilize professional translation services for important documents and communications. This is a better and short-cut way to minimize misunderstandings.
- Learn about different cultures: Research and learn about the cultural norms and values of your offshore team members. Connect with them on the basis of your research to nurture mutual understanding and respect.
- Establish clear guidelines and expectations: Set clear guidelines and expectations regarding communication styles, work ethics, and time management. Communicate the work environment and style to the employee before onboarding so they can do their personal cost-benefit analysis.
- Encourage open and honest communication: Create a culture of open and honest communication where team members feel comfortable expressing their thoughts and concerns.
By implementing these strategies, companies can effectively overcome cultural and communication barriers and build strong, productive relationships with their offshore teams.
Managing Offshore Teams
The other difficulty that usually arises in such projects is effectively managing remote teams. This presents unique hurdles due to factors such as geographical distance, cultural differences, and time zone disparities.
Let’s start with something basic first. Establishing trust and fostering collaboration is crucial for the success of any remote team. Physical separation can make it difficult to build rapport and create a sense of camaraderie.
To overcome this, you should prioritize open communication. Also, regular team meetings (both virtual and in-person if possible) and opportunities for informal interactions should be utilized as a part of routine. Transparency and accountability is how you keep this mill moving to build trust and strengthen relationships.
Another aspect of this problem, however, has to do with time zones. Although we classified this as a perk in our previous sections, it also has a flip side. It’s hard to coordinate well when your team wakes up when the other goes to sleep.
To mitigate these issues, companies should carefully plan meeting times that accommodate the schedules of all team members. A variety of tools and technologies can help to streamline remote team management and improve communication and collaboration. Some effective tools include:
- Video Conferencing: Platforms like Zoom, Microsoft Teams, and Google Meet enable face-to-face communication and collaboration.
- Project Management Software: Tools like Asana and Trello can help teams track progress, assign tasks, and manage deadlines.
- Instant Messaging and Chat: Platforms like Slack and WhatsApp provide real-time communication and collaboration.
- Document Sharing and Collaboration: Tools like Google Drive and Dropbox facilitate shared access to documents and files.
- Time Tracking: Tools like Toggl and Harvest can help track time spent on tasks and ensure accountability.
By addressing these challenges and utilizing appropriate tools and technologies, companies can effectively manage remote teams and reap the benefits of offshoring while minimizing potential drawbacks.
Hiring Success Stories
1. Headspace
A notable example of a successful offshore venture is our experience with Headspace. As a leading meditation app, Headspace sought to establish an innovation center of excellence in Mexico.
TurnKey’s ability to swiftly execute the initial offshore hiring process, completing it within 30 days of contract signing, significantly accelerated their plans. This rapid turnaround demonstrated our exceptional service and contributed to Headspace’s successful establishment of the center.
2. WhatsApp
In 2014, WhatsApp, a messaging app with a user base of over 450 million monthly active users, was acquired by Facebook for a staggering $9 billion. Despite having a relatively small team of 55 employees at the time, WhatsApp had rapidly gained global popularity.
A key factor contributing to WhatsApp’s meteoric rise was its strategic reliance on offshore talent. By leveraging development teams based in Eastern Europe, the company achieved remarkable success, consistently ranking among the top apps on platforms like Google Play and the App Store. WhatsApp’s offshore strategy enabled it to scale rapidly and become a valuable asset within Facebook’s portfolio.
Conclusion
As we’ve seen, offshoring offers numerous benefits for businesses seeking to optimize their operations and remain competitive in today’s global market. From significant cost savings with offshore hiring to access to a vast pool of talented professionals, the advantages are substantial.
But how do you quantify this for your company? How do you make a data-backed and informed decision? To determine if offshoring is the right strategic fit for your organization, we encourage you to utilize DigitalHire’s Offshore Hiring Savings Calculator. This tool can provide valuable insights into potential cost reductions and help you make informed decisions.
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