Offshore outsourcing, also known as business process outsourcing (BPO), refers to a practice in which a company hires an external service provider from a different country to perform specific business processes, such as customer service, IT support, or data entry. The United States is one of the biggest consumers of offshore outsourcing services, with a market share of 37.8% in 2021 (Statista, 2021). In this blog, we will explore the benefits and disadvantages of offshore outsourcing for medium to small businesses in the United States.
Offshore outsourcing definition
Offshore outsourcing is a cost-effective strategy that allows businesses to tap into the global talent pool, thus leveraging the expertise of skilled professionals, or virtual assistants, in other time zones. By outsourcing specific tasks to a specialized offshore outsourcing company, businesses can focus on their core competencies and streamline their operations.
Advantages of offshore outsourcing
Cost Savings
One of the most significant advantages of offshore outsourcing is cost savings. Offshore outsourcing companies are often based in countries where labor costs are lower, such as India, the Philippines, Mexico, and South Africa. According to a study by Deloitte, outsourcing to low-cost countries can result in cost savings of up to 70% (Deloitte, 2021). Offshore outsource services can be a game-changer for small and medium-sized businesses with limited budgets.
Access to Skilled Professionals
Offshore outsourcing also provides businesses with access to a larger pool of skilled professionals than they might find locally. For example, the Philippines has a large pool of English-speaking virtual assistants, although not native-speaker, who are adept in a wide range of tasks, including data entry, social media management, and customer service. In hiring a virtual assistant from the Philippines, a US-based business can tap into this expertise and improve its operations.
Flexible Work Arrangements
Offshore outsourcing also provides businesses with flexible work arrangements. For example, by outsourcing to a company in a different time zone, businesses can take advantage of such a time difference, thus having tasks completed overnight. This can be especially beneficial for companies that require 24/7 customer service or IT support.
Disadvantages of Offshore Outsourcing
Communication Barriers
One of the biggest disadvantages of offshore outsourcing is the communication barrier, especially when outsourcing services to non-native-English speaking virtual assistants. When working with an offshore sourcing company, there may be language and cultural hurdles that can make it challenging to communicate effectively. This can lead to misunderstandings, delays, and mistakes.
Quality Control
Offshore outsourcing also poses a challenge to quality control. When outsourcing certain tasks, businesses may have less control over the quality of the work. This is especially true when working with an offshore sourcing company that is not familiar with the specific needs of the business.
Data Security
Offshore outsourcing also raises concerns about data security. When outsourcing tasks that involve sensitive information, such as customer data or financial information, there is a risk that the data may be compromised. This risk can be mitigated by working with a reputable offshore sourcing company that has strict security protocols in place.
Offshore Outsourcing CompaniesÂ
There are many offshore sourcing companies in the US that provide services to small and medium-sized businesses. These companies offer virtual assistant services to businesses in a variety of industries. Their virtual assistants are based mainly in the Philippines and India. They are proficient in various tasks, including data entry, customer service, social media management, and digital marketing.Â
However, Aristo Sourcing also provides the same services, but the difference is that the company sources great talent from South Africa. Therefore, businesses can have access to native English-speaking virtual assistants at affordable rates.Â
Conclusion about offshore outsourcing
Offshore outsourcing can provide significant benefits to small and medium-sized businesses in the US, including cost savings, access to expert professionals, and flexible work arrangements. However, outsourcing also poses certain challenges, such as communication barriers, quality-control issues, and data security concerns. When considering outsourcing offshore, it is essential for businesses to weigh the benefits and disadvantages, choosing a BPOÂ offshore company that is reputable and has experience working with US-based clients. Businesses can thus maximize the benefits of offshore outsourcing, improving their operations.