- Offshore staffing is a proven strategy for cost reduction, and it involves relying on workers from other countries to handle certain business functions or processes.
- Some of the top offshore locations are India, the Philippines, Brazil, Mexico, and Malaysia.
- Working with recruitment process outsourcing (RPO) companies is an excellent way to streamline the process of finding qualified offshore workers from different parts of the globe.
There is an age-old question for many business owners: How do you cut costs without compromising the quality of your products and services? Thankfully, there is a simple answer to that problem now, and it is called “offshore staffing.”
Over the last few years, offshore staffing has become a strategic tool for many businesses looking to reduce costs while simultaneously gaining an advantage against their competitors. This strategy involves relying on workers from other countries (preferably nations with lower labor costs) to take care of certain business functions.
When you look at the numbers, you will get a better idea of how much you can save by using this strategy. Take minimum-wage workers for example. The Federal minimum wage is at $7.25 per hour, but many states have imposed certain laws that have caused their minimum wage to increase. This amount is much higher compared to the minimum wage in many popular offshore staffing destinations, like India and the Philippines.
And of course, this lower labor cost can also be felt in other kinds of jobs, even highly skilled ones, like engineers and IT professionals that are often needed in many business functions.
Without a doubt, offshore staffing can help you reduce labor costs. It is a proven strategy being used by many businesses in the US, so there is a high chance that it will work for your company, too. However, if you are still second-guessing the effectiveness of offshore staffing, being more familiar with it can definitely help.
In this article, you can learn more about this strategy, its benefits, and its common challenges. Read on!
Offshore Staffing vs. Outsourcing
Many people confuse offshore staffing with outsourcing. This is understandable given how related they are, but they are not quite the same.
Outsourcing
Outsourcing refers to the business practice of hiring an external party to perform specific business functions or processes. In other words, it simply means delegating certain tasks or operations to a third-party service provider, which can either be an individual or an outsourcing agency.
The decision to outsource is often driven by a desire to reduce costs and improve business efficiency. In some cases, outsourcing can also provide access to specialized expertise and technologies that may not be available in-house.
Offshoring is just one type of outsourcing. There are other models available that US-based businesses can explore.
Different Outsourcing Models
- Onshoring – Onshoring refers to the practice of outsourcing business processes to a different location within the same country. By keeping operations domestic, companies often benefit from reduced transportation costs, easier management and control, and sometimes, even similar time zones.
- Nearshoring – Nearshoring involves outsourcing business processes to a nearby country, usually with a shared border. This approach typically offers lower labor costs while maintaining relatively close proximity and possibly shared time zones.
- Offshore Staffing – Offshore staffing, sometimes called “back office,” entails hiring employees from foreign countries to perform business functions that are usually done in-house. This strategy often results in significant cost savings and access to a larger talent pool. US businesses that use this method also get the opportunity to operate 24/7 due to time zone differences.
Benefits of Offshore Staffing
More and more US businesses are requesting offshore staffing services from trusted agencies all over the world. The reason is simple: they see the many benefits of this strategy, particularly in terms of cost reduction. There are a lot of other advantages to offshore staffing, and you can check out some of them below:
1. Cost Reduction
One of the most compelling advantages of offshore staffing is its potential to significantly reduce operational expenses. Lower labor costs in popular offshore staffing destinations are often the primary driver. Minimum wages in some states reach nearly $16.00 per hour; this helps workers a lot, but it can also be detrimental to some companies.
Thankfully, you can hire workers from countries with a lower cost of living. In India and the Philippines, for example, minimum-wage workers earn less than $2.00 per hour. So even if you pay them around $10.00 per hour, it’s still a win-win situation for both parties. They’ll still feel like they’re earning a lot, and you’re not breaking the bank just to cover their wages.
Even highly skilled professionals in those countries do not charge a lot for their services. Take engineers for example. They receive an average annual salary of $102,066 in the US, according to 2024 data from Indeed, an international job hiring platform. In India and the Philippines, they get paid an average of ₹693,184 (less than $8,500) and ₱391,573 (less than $7,000) annually, also according to Indeed.
However, your cost savings typically extend beyond just wages. Here are other ways US businesses can save money through offshoring specific business functions:
- Lower Overhead Costs – Companies in these regions often have lower overhead costs, such as rent and utilities. US companies can leverage this if they decide to establish an offshore location.
- Reduced Training Expenses – Finding and training qualified employees in the US can be expensive. Remote staffing can help reduce these costs by leveraging a readily available pool of skilled professionals in other countries, like the Philippines and India.
- Access to Government Incentives – Some countries, like the Philippines and India, offer tax breaks to encourage businesses to “invest” in their economies. Both nations have special economic zones (SEZs) that provide tax advantages and other benefits to foreign companies.
By strategically leveraging these cost-saving opportunities, US companies can significantly reduce their operational expenses, improve profitability, and gain a competitive edge in the global marketplace.
2. Access to Global Talent
Offshore staffing opens the door to a vast pool of skilled professionals with diverse expertise and skill sets. This global talent pool can be a valuable asset for companies seeking specialized skills or facing talent shortages in their local markets.
It is possible for US companies to find it challenging to recruit data scientists in their home country. If they ever face such a problem, they can tap into offshore talent pools and access a wider range of qualified candidates with the necessary expertise. This access to global talent can enhance a company’s capabilities and competitiveness.
Having access to a global talent pool offers a wide range of benefits, including:
- Specialized Skills – Offshore staffing allows companies to access professionals with specialized skills that may be scarce in their home country. The best thing is they are also experts, but they do not charge as much as professionals in the US.
- Diverse Perspectives – A global workforce brings diverse perspectives and cultural insights. This can lead to innovative solutions and ideas that can also benefit your company.
- Language Proficiency – Offshore staffing can provide access to professionals who are fluent in multiple languages. This is extremely valuable for businesses tapping into international markets and looking for clients or customers on a global scale.
3. 24/7 Operations
Offshore staffing enables businesses to maintain continuous operations and improve customer service by leveraging employees in different time zones. With a global workforce, companies can provide round-the-clock support to customers, regardless of their location.
For example, a company with a customer service team in the United States could supplement its operations with an offshore team in the Philippines or India, allowing them to provide support to customers in Asia and Europe while their US team is off-duty. This 24/7 availability can significantly enhance customer satisfaction and loyalty.
The benefits of 24/7 operations extend beyond customer service, though. Here are a few more advantages of having round-the-clock operations:
- Increased Productivity – By leveraging employees in different time zones, companies can maintain continuous operations and maximize productivity.
- Immediate Issue Resolution – Some problems may arise outside of your normal work hours. Your offshore team who work in different time zones can resolve those issues immediately before they escalate.
- Improved Data Security – Cyber attacks can happen while you are off the clock! No worries, though, because your offshore IT team can deal with the threat right away.
4. Focus on Core Competencies
By outsourcing non-core functions to offshore teams, companies can allocate more resources to their core business activities. This allows you to focus on your strengths and areas where you can create the most value.
For example, a manufacturing company in the US might outsource certain business functions (like payroll and accounting) to an offshore team. This frees up their internal resources to focus on product development and innovation. They can also put focus on employee engagement to minimize attrition among their warehouse workers.
5. Scalability
Offshore staffing offers businesses the flexibility to quickly adjust their workforce size based on fluctuating demands. This scalability is quite valuable for companies experiencing seasonal workload fluctuations in their workload. Retail businesses, for example, may expect more customers during the holiday season, so they may rely on some offshore workers to attend to customers through their e-commerce websites.
Startups and budding companies can benefit from the scalability of offshore staffing. These types of companies tend to grow fast, so their in-house team may not be able to handle the increasing workload. In this case, they can hire offshore workers to take care of some tasks.
6. Increased Efficiency
Specializing tasks and delegating them to offshore teams can streamline operations and improve productivity. By leveraging the expertise of specialized offshore teams, companies can optimize their processes and reduce bottlenecks in their business operations and processes.
For example, a company might outsource their customer support to an offshore team specializing in customer service. This allows their internal team to focus on more complex issues. This specialization can improve efficiency and reduce the time and resources required to complete tasks.
7. Innovation
Having access to innovation opportunities is one of the hidden benefits of offshore staffing. Exposure to different cultures and perspectives can foster creativity within your organization. Offshore staffing provides opportunities for collaboration and knowledge sharing with professionals from diverse backgrounds, and this cross-cultural exchange can lead to new ideas, solutions, and approaches to problem-solving.
Business Functions for Offshore Staff
There are many business functions that you can leave to your offshore staff. Here are a few examples:
1. Accounting and Payroll
Routine tasks related to accounting (like data entry, invoice processing, and payroll management) can be efficiently handled by offshore teams. These tasks are often repetitive and time-consuming, but they are essential for maintaining accurate financial records and ensuring compliance with regulations.
By outsourcing these tasks to specialized offshore teams, your in-house accounting team will have more time to do more important tasks. They focus on more strategic financial activities, such as financial analysis, budgeting, and forecasting.
2. Content Creation and Management
Content creation and management are a crucial aspect of modern marketing, but they can be time-consuming and resource-intensive. Relying on offshore workers can be a cost-effective solution for producing high-quality content that aligns with your brand’s voice and target audience.
Offshore content creation teams can provide a range of services, including:
- Blog Post Writing – Offshore workers can create engaging,informative, and search engine-optimized blog posts that drive traffic to your website.
- Social Media Content – You can ask offshore workers to develop compelling social media posts that promote your brand and engage your audience.
- Website Copywriting – Your offshore workers can update your website every so often, especially if you have updates about your products and services. They can also add new keywords once in a while to keep your website SEO-friendly.
- Email Marketing – You can rely on your offshore staff to produce effective email campaigns that help generate leads and drive conversions.
- Out-of-Home Ads – Workers coming from different backgrounds tend to be quite creative. You can rely on them to help you create traditional out-of-home ads that you can place in city centers and other areas with high foot traffic.
3. IT
IT is a critical function for any modern business, but it can be challenging to maintain a skilled and dedicated IT team in-house. Thankfully, you can always rely on offshore workers who can provide cost-effective solutions for managing various IT tasks, such as:
- Software Development – Your offshore IT team can develop custom software applications, websites, and mobile apps. They can either be used by your customers and clients or your employees.
- Technical Support – Offshore IT workers typically provide 24/7 technical support to users. They can troubleshoot problems and resolve issues fast to ensure that they will not escalate.
- Network Administration – You can ask your offshore workers to manage and maintain your network infrastructure. They can help ensure that your cloud servers, routers, and firewalls are working optimally.
4. Customer Service
Customer service is a critical aspect of any business, but it can be challenging to provide round-the-clock support with an in-house team. Offshore customer service workers can be your savior! They can offer numerous services, including:
- Inbound Call Handling – Offshore customer service workers are often tasked to answer customer calls to provide information and resolve issues as needed. Most customer service representatives coming from offshore locations are highly trained in English communications, so you do not have to worry about the language barrier.
- Email Support – You can also rely on offshore workers to respond to customer inquiries sent through emails. Prompt email replies are necessary to keep your customers engaged and prevent them from exploring the services of your competitors.
- Live Chat Support – Customers may contact your company through online chat via your website or social media. Your offshore customer service workers can answer them directly and resolve their issues promptly.
5. Administration
Administrative tasks are essential for the smooth operation of your business, but they can be time-consuming, repetitive, and distracting. If you are too busy or too bored to take care of these administrative tasks, you can delegate them to offshore workers. Some tasks they can handle are email management, data entry, appointment scheduling, and document processing.
Top Countries Where You Can Offshore Staff
Choosing the right country for offshore staffing is a critical decision that can significantly impact a company’s success. Here are just a few of your choices:
1. India
India is renowned for its business process outsourcing (BPO) industry. The country offers a large pool of English-speaking talents that you can hire at competitive labor costs. However, beyond cost savings, you can enjoy many more benefits if you decide to hire offshore talents from India.
The country is well-known for having a skilled workforce with expertise in various fields, including IT, finance, and engineering. The country also has a well-developed infrastructure, like reliable internet connectivity and telecommunications networks, so you do not have to worry about potential communication issues.
2. Philippines
Filipinos are a top choice for offshore staffing because of their strong English proficiency and excellent work ethic. The Philippines also has a long history of providing offshoring services, particularly in the areas of customer service, IT, and other back-office operations.
Labor costs are quite low in the Philippines, too. If you decide to hire Filipino offshore workers, you can even benefit from tax incentives offered by the government in their SEZs.
3. Brazil
Brazil is a popular offshoring location for tech support services. The country has a thriving technology sector and a growing pool of skilled IT professionals. Some of the largest tech companies in the world have established offshore teams in Brazil, taking advantage of the country’s large number of skilled workers.
4. Mexico
Mexico shares a border with the US, making it a popular destination for nearshoring opportunities for many companies. The time difference between Mexico and the US is minimal, which can be valuable for facilitating seamless communication and collaboration.
Mexico also shares a fairly similar culture with the US, which can make it easier for companies to build relationships with offshore teams and foster a positive working environment. Additionally, the country offers low labor costs, making it an attractive option for companies seeking to reduce operational expenses.
5. Malaysia
What many people do not know is that Malaysia has a thriving IT sector, making it a popular choice for US companies looking to build an offshore IT team. The country also has a strong educational system, so you can expect their offshore workers to be quite proficient in English.
Malaysia’s government is also actively promoting the country as a hub for offshoring opportunities. They implement pro-business policies that you can take advantage of.
How To Build a Strong Offshore Team
Building a strong offshore team is not a walk in the park. Do not worry, though, because we have compiled a few tips that can help you. Check them out below:
1. Define Your Business Goals
It is crucial to define your business objectives clearly before embarking on the journey to build your offshore team. Understanding your company’s goals is the first step to effectively formulating strategies to ensure that everyone can contribute effectively to your company’s success.
It will not be an easy feat, but it will help if you ask yourself these key questions:
- What specific tasks or functions do I want to outsource? This question helps you clearly define the scope of work that will be handled by your offshore team.
- What are my key performance indicators (KPIs) for success? By answering this question, you get to establish measurable metrics to track the performance of your offshore team and assess their impact on your business.
- What are my budget constraints? Of course, it is crucial to determine the financial resources available to you that you can use for hiring, training, and managing your offshore team.
By answering these questions, you’ll gain a clear understanding of your business goals. You can also establish a solid foundation for building a strong offshore team.
2. Find Experienced Workers Through RPO Companies
Hiring the right people is essential for building an offshore team, and working with a reputable recruitment process outsourcing (RPO) company may be the first step to achieving that goal.
RPO refers to the strategy in which a company leaves their recruitment processes in the hands of a trusted agency. RPO companies like Sysgen RPO specialize in finding experienced and skilled workers, and their networks stretch across the globe. It should not be surprising for them to have the capability to assist you in recruiting the best workers to join your offshore team.
There are many benefits to working with RPO companies, and here are a few of them:
- Global Networks – RPO companies have established networks of candidates in various countries, providing access to a wider pool of talent.
- Cost-Effectiveness – Hiring unqualified candidates can be costly because the time and money you have spent in recruiting them can never be taken back. To ensure that you will not end up experiencing this problem, working with an RPO company is a great idea.
- Streamlined Process – RPO companies handle the entire recruitment process, from sourcing candidates to conducting interviews and making hiring decisions. With their help, you can ensure that you will quickly onboard the best of the best.
If you decide to partner with a reputable RPO company, you can ensure that your offshore team is composed of highly skilled and experienced professionals. This way, you can be confident that everyone of them can contribute greatly to the success of your business.
3. Use the Right Project Management Tools
Effective project management is essential for ensuring that your offshore teams are doing their assigned tasks efficiently and effectively. You can Invest in the right project management tools that can streamline communication, track progress, and enhance the overall productivity of your offshore team.
Not all project management tools are created equal, though. It is important to look for certain features, including:
- Task Management – Invest in a tool that can help you assign tasks, track progress, and set deadlines.
- Communication and Collaboration – Be sure that your project management tool has chat and video conferencing capabilities for seamless communication and collaboration within your teams..
- Reporting and Analytics – Your project management tool should have a user-friendly dashboard that allows you to track progress, identify bottlenecks, and measure performance.
With the right project management tools, you can create a collaborative working environment for your offshore team. More so, you can ensure that their projects are completed on time and within budget.
4. Invest in Training and Coaching
Training and coaching are essential for ensuring that your workers are equipped with the right skills to complete the tasks assigned to them. The same goes for offshore teams. Investing in training programs can help bridge any knowledge gaps, enhance technical skills, and foster a culture of continuous learning.
5. Set Regular Meetings as Necessary
Regular meetings are a crucial aspect of building a strong offshore team. They provide an opportunity to foster a sense of belonging and an avenue to give feedback and support as necessary. Regular meetings also ensure that you and your offshore workers are aligned with the same goals.
When conducting meetings, there are certain factors you should consider. Here are a few examples:
- Set Clear Agendas – Create clear agendas for each meeting to ensure that the discussions are focused. It prevents you from going off-topic, too.
- Use a Variety of Communication Tools – Leverage video conferencing and screen-sharing tools. They help facilitate effective communication with your offshore team.
- Assess if Cameras Need To Be On – There are pros and cons to “camera on” meetings. Be sure to assess if you really need to require cameras to be on during the meeting.
By scheduling regular meetings, you can build trust, enhance communication, and foster a strong team culture. Even though you work across geographical boundaries, you would feel like you are still together inside an office.
Overcoming the Challenges Associated With Offshore Staffing
Of course, there are challenges associated with offshore staffing. Here are effective ways to resolve them:
1. Communication Barriers
Effective communication is key to the success of offshore teams, but language differences, cultural nuances, and communication styles can create barriers. To overcome this challenge, it is necessary to hire from offshore locations that are known to have workers with high English proficiency. This way, you can ensure that your offshore workers can communicate well with you, significantly decreasing the chances of miscommunications.
It is not necessary, but you can also invest in language training. Encourage your onshore workers – particularly the ones who collaborate with your offshore teams – to learn the basics of the language of your offshore workers. This is a way to better understand your workers who come from foreign nations.
2. Time Zone Differences
Managing time zone differences can be a logistical challenge for offshore teams. Thankfully, you can use certain tools to optimize meeting schedules to ensure that you have a few overlapping work hours with your offshore workers.
You can also take advantage of asynchronous communication tools. They allow you to communicate, collaborate, and share information with your offshore workers without meeting them real-time.
3. Data Security Risks
Sharing sensitive data with offshore employees can raise concerns about data security. However, by implementing robust digital security measures and conducting regular audits, you can mitigate data security risks.
Training employees on data security best practices and ensuring compliance with data protection regulations are also needed. They help you ensure that your offshore workers are handling your sensitive information properly.
4. High Turnover Rates
Turnover rates refer to the number of employees leaving a company within certain time periods. High turnover rates are always a problem with offshore workers, especially if an employer-employee relationship is not well-established. Thankfully, there are ways to combat this problem.
One way is to offer competitive compensation and benefits. Providing workers with attractive salary packages is a tried-and-tested strategy in preventing them from leaving and looking for “better” career opportunities. The same technique works with offshore workers.
Creating a positive work environment is also a great strategy. It is hard to totally get rid of workplace toxicity, but you can significantly diminish it by prioritizing the well-being of your employees. You can also offer rewards and recognition to your top-performing workers to make them feel more appreciated. This strategy works with both offshore and onshore teams and helps you retain your best employees.
5. Possible Low-Quality Outputs
Ensuring the quality of work produced by offshore teams is essential, but it can be quite difficult given that they work remotely. However, you can resolve this issue by establishing clear quality standards and implementing strict quality-control measures.
You can also provide regular feedback and support to your offshore workers. If possible, invest in their training and development, too, to address concerns about low-quality outputs.
Let Our Team Help You Find the Best Offshore Workers
Offshore staffing is a powerful tool that US companies can use to ensure business growth. It has a lot of advantages, particularly in terms of cost reduction, scalability, and increased operational efficiency. You can also benefit from potential 24/7 operations due to time zone differences.
There are many countries where you can get offshore workers, but some of the most popular ones are India, the Philippines, Brazil, Mexico, and Malaysia. Finding the right workers can be challenging, but it would be greatly beneficial if you work with RPO companies.
Sysgen RPO is here to help! We are a trusted provider of excellent recruitment process outsourcing solutions. As your offshore staffing partner, feel free to rely on us if you want to hire offshore workers for your day-to-day business operations.
We are excited to work with you. Learn more about our services today by getting in touch with our team.
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