06 Jan

Exploring Offshoring and Expansion

Penetrating the global market may seem idealistic for starting businesses. Talk about the costs of expanding operations in another country with different laws and cultures. But this is now possible. Not just big and established brands can serve different races across the world. Your business can, too. And it is through offshoring.

offshoring

Offshoring, as defined by businessdictionary.com is “the moving of various operations of a company to another country for reasons such as lower labor costs or more favorable economic conditions in that other country.”

Reasons for offshoring range from expensive local(of the company) labor costs to expansion per se. As a start-up business, it is a cheaper and facile option that is more economically efficient.

Offshoring and Outsourcing

Though offshoring and outsourcing have similarities, offshoring is more of a geographical activity. You may outsource your offshore team but on the other hand, your outsourced team doesn’t mean it is an offshore one.

Major Reason(s)

Expensive local labor cost. In a thriving economy and country, the cost of labor also increases that is why [multinational] companies look for alternative ones. They can consider allocating these business processes to a third-party company in countries like the Philippines, China, India, and Malaysia where labor costs are cheaper and the force are competitive. For instance, hiring local CSRs (customer service representatives) in Australia could cost an average of $60,000 annually while you can get this service in an offshored team in a quarter of the price and in an equal quality of service.

There’s no harm admitting that all business functions can not handle well by a single entity. There will come a time that it will need help because of instances like shortage of employees and skills for needs like chat support, creative or graphic design or IT solutions and such. Searching for help may be a challenging process considering the range of companies offering excellent services across the world.

Cutting costs will always appear in the list of why’s. Building an office, flying a whole team, recruiting and training a new set of workers to a foreign land will surely break the bank. Thus, strategists will always nod at the cheaper yet effective option.

Achieving a global presence and meeting demands of a growing market are the main reason for big brands like Nike to have some of its manufacturers in a foreign land that has cheaper labor costs. Companies like Apple, Microsoft, and IBM also have departments in countries like the Philippines and India which is now a top offshoring site for companies abroad. Through offshoring, they are able to get quality service (that is competitive to what their local labor force can offer) at a cheaper price. Who wouldn’t want that?

Also, companies are taking advantage of the geographical fact that the countries have different time zones and offshoring will make them ‘function’ 24 hours. After all, you can’t require a single employee to work for you for 24 hrs. But workers in countries like the Philippines are more willing to work at different time shifts.

Offshoring, truly, is an option for growing companies or businesses that want to expand. It is a cheaper option indeed and a more efficient one when the right partnership with the third party has been done. Did you know ATHL can help you start your offshore team in the Philippines? As an offshoring company in the Philippines, we help brands from anywhere across the globe to expand and to reach a bigger market through offshoring. Want to know more? Write to us at bd@athl.com.hk.

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