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Today, we live in a highly connected and virtually borderless world. Companies are no longer restricted by geographical boundaries. They can establish subsidiaries anywhere around the globe. Not only that, they can also transfer resources including machinery, technology, knowledge, and even humans. For quite a few years, businesses have started using outsourcing as a measure to save costs and increase efficiency.
Outsourcing refers to contracting out non-core tasks and processes of a company to third parties that may be within or outside the home country. When outsourcing is done abroad, it is known as offshore outsourcing. Another concept called ‘offshore staffing‘ is becoming popular in the business world. Although it is often confused with outsourcing, offshore staffing is a little different.
What is Offshore Staffing?
No matter how big an organisation is, it requires talented and skilled employees at an affordable rate. There are several ways in which you can find the perfect employees for your company. You may publish advertisements, call for referrals, hire consultants and head hunters. However, such a process of recruitment, selecting, and interviewing employees can prove to be very expensive and time-consuming. Once hired, you will also have to invest considerable resources and hours in training and managing them.
Is there an easy way out?
Well, yes! Offshore staffing is a process through which companies can hire and build a team of provisional workers overseas. In other words, organisations engage in offshore hiring when they build a development centre abroad and hire a team of employees from the same country. There are essentially two ways of hiring remote staff. You can either do it yourself or approach an offshore staffing agency. These agencies offer offshore staffing solutions to various kinds of businesses irrespective of their size. Some common services that are outsourced offshore are creative tasks, data processing, IT software and development, customer care services, accounting, etc.
What are the benefits of Offshore Staffing?
Offshore staffing can result in numerous benefits for a business. Some of them are:
1. Cost Efficiency:
The most common reason why companies opt for offshore staffing is that it results in cost savings. Since the world has turned into a global village, hiring remote staff is no longer difficult and costly. The cost of hiring an employee with a certain set of skills varies across the globe depending on the strength of the host country’s economy, international business regulations, workforce available, and so on. Mostly, offshore destinations tend to offer highly qualified professionals at a lower cost. For example, an American company is likely to pay USD 25 per hour to hire a local entry-level employee. On the other hand, it can hire the same skill set at a mere cost of USD 4 per hour in the Philippines. Therefore, offshore staffing results in significant operational and labour costs.
2. Release resources and time:
Offshore hiring can help you in freeing up your internal resources and invest your valuable time in strategic areas of the business. For instance, if you hire an offshore staffing agency in the Philippines, you will receive services like recruitment, training, managing, payroll, accounting, technical support, and so on. In short, they will take care of most human resource functions in their home country. Hence, you will get more time to focus your resources and energy on the core areas of your business rather than getting engaged in hiring, managing, and housing your employees. This helps in increasing the efficiency of your in-house activities.
3. Get access to the most taleneted professionals:
It is possible that you are not able to find candidates with the required skill set in your own country. That should not stop you from building your ideal team. Through offshore staffing, you can easily get access to highly qualified professionals that reside in different countries. These people will act as a cost-effective extension to your internal team and provide services that will help in growing the business further.
4. Retain control:
Unlike outsourcing, offshore hiring allows you to remain the boss of your team. Thanks to technological developments, you can manage and communicate with your remote team workers effectively despite the distance involved. You will still be responsible for assigning tasks to the remote workers and getting regular reports for them.
5. Continuous operations:
Another advantage of offshore staffing is that your business operations would not get affected by any crisis happening in your home country. For instance, the occurrence of a natural disaster in Canada will surely hamper regular business activities for some time. But if the company has staff working overseas that remains unaffected by the disaster, business continuity will remain intact. In fact, you will get trained and highly skilled individuals who will be able to manage the workload of the affected employees as well. Offshore staffing thus, helps you in ensuring sustainable growth for your company without overspending.
6. Work 24/7:
Remote staffing allows companies to operate 24 hours due to the the difference in time zones. While your employees in the home country sleep, staff members in other countries work. A large number of companies in the US use offshore staffing to leverage this particular benefit. They hire workers in countries like the Philippines, India, China, and Australia that have a time gap of a minimum of 12 hours.
7. Business expansion:
Since offshoring helps in freeing up internal resources such as infrastructure, you can use the released assets for expanding your business. Offshore hiring also reduces the chances of losing potential clients because of heavy workload as the work is distributed among many across time zones. While offshore hiring supports business expansion, the opposite is also true. When your business grows across, you will need access to more professionals to control the demand and manage the piling work.
8. Earn higher profits:
Offshore hiring reduces costs, releases strategic resources, and helps businesses in establishing a global presence. It also enables them in getting access to a highly talented pool of individuals and work for longer durations. Companies not only earn high returns due to low labour costs but also the cost of technologies is lower in the offshore countries. All these factors result in low cost of production, higher productivity, and thus, higher profitability.
What are the cons of offshore staffing?
Just like the two sides of a coin, offshore staffing comes with its own set of challenges as well.
1. Difference in language:
Differences in languages and cultural practices of the people belonging to the home country and the host country can lead to communication barriers. Most companies that indulge in offshore hiring use English as the primary language for communication. The hired remote workers might not have the same level of understanding of the language as them. A distinct accent, varied meanings of the same words, misinterpretations, and other semantic factors can cause trouble in effective communication.
2. Cultural difference:
The culture of the Western countries is significantly different from that of the Eastern countries. When people belonging to different cultures interact with each other, there are greater chances of miscommunication. The practices that are considered acceptable in one country may not be appropriate in another. For example, a male employee shaking hands with a female is not a big deal in America but not in most Arab countries. Similarly, an American executive may interact with his employees in a frank manner. However, his employees in the Philippines may become uncomfortable with such behaviour as they tend to be more reserved. Therefore, cultural differences can lead to misunderstanding which in turn can affect your business.
3. Time zone difference:
Operating in countries with different time zones definitely helps your business to run 24/7. But at the same time, it also poses various challenges in properly managing and communicating with the remote workers. There can be communication gaps which can lead to delayed decision making. In tasks that have deadlines and are time-sensitive, delayed communication can cause further problems.
4. Ethical issues:
For quite a long time, off-shoring, companies face ethical concerns. They are often blamed for increasing unemployment in their own countries or exploiting cheap labour overseas. When organisations decide to hire remote staff to carry out some of their present operations, it results in heavy layoffs and increases job insecurity among the present employees. Such instances can affect the public image of the companies.
5. Labour laws and tax complications:
Different countries have different labour and tax laws. It is necessary for off-shoring companies to have a knowledge of the same and operate within them to avoid legal complications later. Despite the challenges involved in offshore staffing, it is still a popular business strategy to ensure sustainable growth for your business. If your competitors are also engaging in the same practices, you may incur heavy losses if you do not follow them. Therefore, do not be afraid of hiring offshore workers to expand your business and increase profitability. At the same time, take care of the ethical issues and prepare well for more managing the remote staff effectively and efficiently.
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