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Savings Is Not The Only Reason To Outsource Overseas

Integrated Globaltech - Cost Savings Not The Only Reason To Outsource Overseas
Savings Is Not The Only Reason To Outsource Overseas

A Google search for "Why I should outsource overseas/ offshore?" will give you a myriad of results, all with the a very common theme being, "reduced costs". While this is correct, there are also plenty of other reasons, just as important, as to why overseas outsourcing/ offshoring is beneficial for a business. This article will explore some of the non-cost related benefits of overseas outsourcing/ offshoring for businesses.

Larger Talent Pool

Australia's population in comparison to most countries is relatively small. To put things into perspective, in 2016, Australia's working age population was approximately 14.5 million (Australian Bureau of Statistics). In comparison, metro Manila, the capital city of the Philippines, had a working age population of 5.6 million (Philippine Statistics Authority) with the entire working age population of the Philippines being 41 million, almost twice that of Australia's entire population. Although these statistics do not represent a break down of the areas of expertise or industry, it does illustrate the vast comparison in population size.

Cultural Diversity

There have been comprehensive studies conducted in relation to the benefits that cultural diversity brings to a work environment. These studies have confirmed that cultural diversity brings about improved innovation, improved team decisions, increased language skills, greater team efficiency and attracts greater talent.

Studies confirmed that the underlying advantage of cultural diversity was that it brought about different view points and perspectives into internal, strategic and operational discussions. A study conducted by MIT found that racially diverse teams were more likely to outperform their non-racially diverse counterparts by 35%, a massive difference!

Increased Client Support

Overseas outsourcing/ offshoring allows businesses to provide greater support to their clients. The initial stages of any overseas outsourcing/ offshoring process will always require some form of intense training and handover from local staff, resulting in lost time and expenditure. However once overseas teams are setup, it results in overall increases in actual man hours, hours that can be spent, by either the local team or overseas team, in ensuring greater client support.

Overseas outsourcing/ offshoring can also lead to an indirect increase in client support, through greater efficiency and increased quality of output, due to reduced staff work loads, leading to happier clients and happier staff.

Potential Leadership Or Managerial Opportunities

The most common misconception with overseas outsourcing/ offshoring, is that it is only for roles or tasks that are considered of "low-value", however this could not be further from the truth. Overseas outsourcing/ offshoring attracts great leadership and managerial talent. However it takes a very innovative and open mindset to consider such benefits and opportunities.

Of course, with any leadership and managerial position, there is always a need for mentorship, development and guidance, however dismissing the possibility entirely can often be a mistake.

All The Other Reasons That Are About Cost Savings

As seen from the above, there are plenty of non-cost saving reasons to outsource overseas/ offshore. However the bottom line for any business is to maximise profits, so inevitably the reason most businesses choose to outsource overseas/ offshore, usually revolves around cost. Below, discussed in brief, are some of the most common cost saving reasons to outsource overseas/ offshore;

  • Removing operational tasks from the most knowledgeable local resources, freeing up their time to focus on the more profitable aspects of a business;

  • Removing staff overheads, such as tax, HR, payroll, performance management, IT, physical office space, superannuation and insurance.

  • Greater returns. Hiring costs of one local staff member, could potentially hire 2-3 offshore staff when taking into consideration the direct costs of hiring local staff, being wages ,payroll tax, payroll, HR, superannuation, IT, office space and insurance.

As seen from above, overseas outsourcing has many non-cost saving benefits in addition to the cost savings benefits that it can bring to a business.

The main takeaway from this article is that businesses should take a holistic view when considering overseas outsourcing/ offshoring, in order to asses all the impacts it will have on their business, in order to see if overseas outsourcing/ offshoring is right for them and how they will benefit, both from the cost savings and the non-cost savings.

If you want to know more about overseas outsourcing/ offshoring or if you are now considering the possibility of overseas outsourcing/ offshoring, feel free to contact Integrated Globaltech by clicking here.

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