How to outsource - the right and wrong way to offshore

Nick Ogden
Nick Ogden
    4 minute read

Offshoring has become increasingly popular, however, before a business jumps in and hires offshore employees there are some things to consider. Hiring offshore employees provides unprecedented opportunities for growth development of businesses of all sizes.

Andrew Cornell, ANZ Blue Notes Editor was quoted “while there may be fears of offshoring of jobs or that investing in another country erodes value back home, there is growing evidence of onshore benefits to offshore activity. The whole pie gets larger So not only does offshoring help the country that the work is going to, but it can also have positive financial benefits to the home country.  But like all investments it comes with risks. These risks can be mitigated if they are known and planned for. Here are a few considerations that businesses need to assess prior to investing in offshore talent.

Realistic about costs

The main reason people look to outsource is cost savings. The decrease in labor costs and the associated costs and overheads is very attractive. However, because of some of the other risks there is a learning curve to offshoring. This learning curve means that offshore workers may not be immediately as efficient as their on shore counterparts. So there needs to be realistic expectations of cost savings at least in the first year. If business owners are looking at offshoring as part of their long term strategy the first year needs to be about embedding processes and managing the process so that the offshore employees are successfully integrated. If this is done well then they can expect that in future years there will be up to 70% savings in labor costs alone.


Whether they are working on shore or offshore employees need to be part of the team. The more the offshore employees are included as part of the team the more committed and engaged they will be with the business and their customers. It is important to find ways to include the offshore team members and integrate them into the team communications. Including them on team emails or using technology such as Skype so that they can participate in team meetings will increase their feelings of inclusion. It is important to have daily communication with offshore employees. This builds the relationship between the employee and the manager and develops trust.

Measuring and monitoring performance is essential in identifying issues as they arise. Because the worker is remote from the manager there needs to be metrics and processes in place to assess performance and output. Feedback is an important tool to help offshore employees improve performance and develop their skills and knowledge. This is an investment in the individual so that over time they become a valuable asset in the business.

Cultural Differences

For some locations there will be some cultural differences. here may be language and accent challenges that impede communications, and this can also cause misunderstandings. There are cultural norms within both the managers country and the offshore employees country that if misunderstood can cause offence or confusion. Doing some research on some of the challenges and tips for communicating with workers of a particular country will ensure that the relationship gets off to a good start.

Work Disruption

Disruption to work can occur in developing countries as a result of political unrest, natural disasters or unreliable services. This could result in offshore workers being unable to complete their tasks. Depending on what tasks are being completed by the offshore team it can bring a business to a grinding holt. If this is a risk that the business can’t withstand then it may be best to look at which tasks are being completed by the offshore and on shore team. Rather than having an entire project or process be completed by the offshore team it may be more effective to have parts of the process completed by each team. This way the knowledge isn’t owned by one team, if there is an issue with one team the other team can pick up the extra processes till stability has been established.

A work from office solution can also be a way to ensure consistency of service.  Your offshore staff would attend work in a professional offering environment.  This can reduce risk of internet drop outs, power outages and other disruptions.  It can also form part of your Employee Value Proposition in attracting and retaining talent as additional facilities can be offered like cafeterias, employee relations events and human resources support.   There is also added benefit of being a secure, supervised environment.

Offshoring is a resource investment strategy that can transform a business and their potential to grow. To maximise the benefits and ensure that it is effective risks need to be identified and processes need to be implemented to mitigate these risks.

If you are interested in learning more about how your business can thrive with offshore staff, view our guide on the Top 10 roles you need to boost capability and margins.

Airplane 3

Business growth tips delivered to your inbox weekly

Airplace 6
Boost your knowledge about offshoring, register for our education series here.