Outsourcing is nothing new in South Africa, and many businesses outsource in one form or another. However, there is an ongoing debate regarding which form of outsourcing is better between onshore and nearshore. We say it depends on your company’s needs.
The South African business process outsourcing market is projected to reach USD 3.6 billion by 2027, growing at a CAGR of 13.2% during the forecast period. These statistics make you wonder why outsourcing offshore to South Africa is a choice for many businesses abroad.
In this article, we will dive into the critical details and forms of outsourcing, why companies abroad choose Offshore staffing, and finally, the benefits of doing so. Let’s look at the different types of outsourcing you may encounter.
What Is Onshore Outsourcing?
Onshoring means outsourcing your project or work to a company in your own country. This transfer is usually reserved for non-metropolitan areas where the cost of living and wages are lower than in metropolitan areas.
Cutting down expenses and costs is not necessarily the priority of companies that use an onshore outsourcing approach. US companies, for instance, use onshore outsourcing when they want to maintain high-quality output.
Onshore outsourcing doesn’t come with risks such as foreign labor taxing policies or cultural differences that are often a factor with offshore and even nearshore outsourcing. However, it is a little-used practice, especially in tech industries like IT, because there is not a lot of financial benefit for the business that outsources the jobs.
What Is Nearshore Outsourcing?
Nearshoring means outsourcing your project or work to a company from a nearby country. For instance, if a business based in the US outsources its processes to Mexico or Columbia.
Potential travels and face-to-face meetings come at a lower cost than offshore outsourcing to faraway regions. Nearshore outsourcing also enables more control and facilitates cooperation between the outsourcing business and the outsourcing partner that does the work.
Also, significant cultural and linguistic compatibility reduces the chances of misunderstanding and facilitates the coordination of work. Nearshoring potentially maximizes business efficiency and reduces the barriers of traditional offshoring.
What Is Offshore Outsourcing?
Offshore outsourcing or offshoring is the most budget-friendly outsourcing approach. Offshoring is outsourcing business and work processes to companies, vendors, or individuals in distant countries with low expenses and a great talent pool.
Usually, these destinations include countries in Eastern Europe, East, and South Asia, including China, India, and the Philippines, or from Africa to countries like South Africa. Offshoring is similar to nearshoring in many regards, only without proximity restrictions – however, this method comes with a more extensive degree of cultural and linguistic differences.
Also, time zone differences play a significant role in the functioning of the work. With offshore outsourcing, you can build a business team of full-time employees that function relatively independently but with a specific control established via video calls and regular communication via email and messenger services.
Offshoring allows businesses that outsource their processes to handpick their employees with no geographical limits that will collaborate with the in-house team on projects and keep the work results consistent.
So, how do you pick the right outsourcing strategy?
As mentioned earlier, everything depends on your business’s needs and vision. There is no one size fits all approach. We will focus more on offshore outsourcing/ staffing and what the benefits are and what it may entail.
What are your options when looking to outsource offshore?
Offshore staffing is a process through which companies can hire and build a team of provisional workers overseas. In other words, organizations engage in offshore team hiring when they build a development center abroad and hire a team of employees from the same country.
There are essentially two ways of hiring remote staff. You can either do it yourself or approach an offshore staffing agency that offers offshore staffing solutions to various businesses, irrespective of their size. Some common offshore outsourced services are creative tasks, data processing, IT software and development, customer care services, accounting, etc.
Here are 8 ways offshore staffing can boost your business
Offshore staffing can result in numerous benefits for a business. Some of them are:
1. Cost Efficiency:
The most common reason why companies opt for offshore staffing is that it results in cost savings. Since the world has become a global village, hiring remote staff is no longer difficult and costly. The cost of hiring an employee with a particular set of skills varies globally depending on the strength of the host country’s economy, international business regulations, workforce availability, etc.
Offshore staffing companies usually offer highly qualified professionals at a lower cost. For example, an American company will likely pay USD 25 per hour to hire a local entry-level employee. On the other hand, it can employ the same skill set at a mere cost of USD 4 per hour in the Philippines. Therefore, offshore staffing results in high operational and labor costs.
2. Release resources and time:
Offshore team hiring can help free up your internal resources and invest your valuable time in strategic areas of the business. For instance, if you hire an offshore staffing agency, you will receive services like recruitment, training, managing, payroll, accounting, technical support, etc.
In short, they will take care of most human resource functions in their home country. Hence, you will get more time to focus your resources and energy on the core areas of your business rather than getting engaged in hiring, managing, and housing your employees. This helps in increasing the efficiency of your in-house activities.
3. Get access to the most talented professionals:
It is possible that you can’t find candidates with the required skill set in your own country. That should not stop you from building your ideal team. You can quickly access highly qualified professionals in different countries through offshore staffing. These people will act as a cost-effective extension to your internal team and provide services that will help grow the business further.
4. Retain control:
Unlike outsourcing, offshore team hiring allows you to remain the boss of your team. Thanks to technological developments, you can effectively manage and communicate with your remote team workers despite the distance involved. You will still be responsible for assigning tasks to the remote workers and getting regular reports for them.
5. Continuous operations:
Another advantage of offshore staffing is that your business operations would not be affected by any crisis in your home country. For instance, a natural disaster in Canada will surely hamper regular business activities for some time. But if the company has overseas staff unaffected by the disaster, business continuity will remain intact. In fact, you will get trained and highly skilled individuals who can also manage the workload of the affected employees. Offshore staffing thus, helps you ensure sustainable growth for your company without overspending.
6. Work 24/7:
Remote staffing allows companies to operate 24 hours due to the difference in time zones. While your employees in the home country sleep, staff members in other countries work. A large number of companies in the US use offshore staffing to leverage this particular benefit. They hire workers in countries like South Africa, the Philippines, India, China, and Australia that have a time gap of a minimum of 12 hours.
7. Business expansion:
Since offshoring helps free up internal resources such as infrastructure, you can use the released assets to expand your business. Offshore hiring also reduces the chances of losing potential clients because of the heavy workload as the work is distributed among many across time zones. While offshore hiring supports business expansion, the opposite is also true. When your business grows, you will need access to more professionals to control the demand and manage the piling work.
8. Earn higher profits:
Offshore hiring reduces costs, releases strategic resources, and helps businesses establish a global presence. It also enables them to access a highly skilled talent pool and work for longer durations. Companies not only earn high returns due to low labor costs, but also the cost of technologies is lower in the offshore countries. All these factors result in low cost of production, higher productivity, and thus, higher profitability.
That’s a wrap
The decision to offshore depends on your operations’ size, complexity, and scope of work. But looking at the massive expansion of companies that are looking for professional staffing solutions, offshoring will be one of the most compelling strategies for business development for many years to come.
Stay ahead of your competition and outsource the right way with the right staffing solutions partner. At MASA, we aim to bridge the gap between our customers’ needs and talent shortages. Our growing team of in-house experts can partner with you for any project and help achieve your business goals. With over 40 years of industry experience, we are ready to support and empower your company with temporary and permanent staffing solutions.
If interested, you can reach out to us for more info about how we can help you.