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Why offshoring should be discussed at your next strategy day
February 26, 2018

Why offshoring should be discussed at your next strategy day

Written by: Aimee Engelmann

Many businesses are joining the trend and looking at ways they can build their businesses through offshoring tasks or roles. Small businesses are often required to be all things to all people. Resources get stretched, and sometimes existing employees don’t have all the skills to operate every aspect of the growing business.

For a business that wants to develop and expand, a great option is offshoring some tasks on either a once off task basis or as a more permanent solution. Offshoring can present a good investment for the SME.

A senior Australian diplomat was quoted as saying “Each day 500,000 Filipinos get out of bed to work for American companies. They are the secret sauce that helps to make American companies globally competitive. Wouldn’t Australia be better off if instead these people got out of bed and helped make Australian companies globally competitive?”

Reduced Costs

For many business owners, there aren’t enough hours in the day. The reality is, if they want to grow their business they need to increase their staffing. However, labor costs can be high, and there are also hidden costs. When hiring locally they need to pay for the staff members wages, and in addition they need to pay superannuation and insurance costs. More employees may also mean the need for a bigger office or workspace, more computers or equipment and other overheads. Permanent employees hired in Australia are also entitled to paid leave. These additional staffing costs can be crippling, and can quickly outweigh the increased sales or revenue that the employee generates.

Offshoring allows additional work to be completed, at significantly reduced costs. Not only is the hourly rate reduced, but they work remotely, so there are no associated overheads.

Scalability

Most businesses have peak periods where there is too much work, and then times when there isn’t as much. Offshoring provides scalability during these peak times. A business may choose to invest in several offshore employees to cover a particularly busy period. Once the peak has ended they can quickly reduce their offshore staffing, which means they aren’t carrying the employee costs over the quieter periods. There is often a very short lead time to hiring offshore, providing a further advantage in that it is very quick to scale up a business.

Greater Availability and Flexibility

Having employees located in different time zones provides opportunities for businesses that hadn’t previously been available. It means that work can be completed faster, for example, a company in Australia may put together the copywriting for a brochure and then send it to their graphic designer in Asia at the end of the Australian work day. Because there is still several hours left in the work day in Asia the brochure can be designed and sent back to Australia. When the Australian workers arrive the next morning the brochure is completed and waiting for them.

Taking advantage of the time zones is also known as ‘follow the sun’ and has exciting opportunities when it comes to customer service. For larger businesses that need or want to have highly responsive customer service, offshoring allows for employees to be rostered in different countries across the time zones. If a customer messages the organisation there is a customer service person waiting to respond immediately, regardless of the time zone in the home country. For a small business with an appetite for global customers it can provide the service of a larger company, at a fraction of the cost.

Access to a greater talent pool

Having a more global approach to hiring can open up a talent pool that previously wasn’t available. It allows businesses to hire people that have diverse backgrounds, experiences and education. This larger pool gives a business the best opportunity for finding the right people to help take the business to the next level.

Increased Control and Reduced Risk

Having teams of people that are located in different locations reduces the business risk. In the case of a natural disaster in one location, there are still people in a different location that can ensure that the business operations can continue. Having offshore employees allows the owner or manager to retain more control over the operations and the quality of work output than if this work was outsourced to another company. For those that have items produced, printed or shipped overseas, offshoring provides an opportunity to have one of their own people on the ground in that country.

Offshoring roles or tasks in a business provides opportunities to grow and expand a business at a fraction of the cost of hiring local people. It can improve service and turnaround times and can spread the risk allowing businesses to develop in ways that previously wouldn’t have been possible.

About the Author:

Aimee Engelmann is Australia’s pre-eminent speaker on the Offshoring industry. She taught UQ Business School’s Executive Program on Offshoring. She is the CEO and Founder of Beepo, an Australian-owned offshoring firm in the Philippines. Aimee is a Fellow of the Australian Marketing Institute, Certified Practising Marketer, and the winner of the 2015 Young Entrepreneur Trailblazer Award. You can follow her on Twitter - @AimeeEngelmann.

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