Outsourcing Jobs Overseas Pros and Cons
Outsourcing jobs overseas is a sensitive topic. Polls indicate that 75% of Americans are against outsourcing overseas. As you would expect no employee likes the idea of losing their jobs to foreigners. The truth however is that 80% of outsourcing is done because of expansion. Expansion based outsourcing happens when a business has an opportunity, but does not have the skills to profit from that opportunity.
The biggest trend in outsourcing, over the last few years, has been for businesses to outsource more white collar jobs and less blue collar ones.
Depending on your business, the time difference can either be a pro or a con. If you are trying to deliver a service 24 hours a day, it is much easier if you have people working in different time zones. On the other hand getting a quick response from employees may be impossible. Also keep in mind that their holidays will not be on the same days as yours.
Cost saving is probably the biggest pro when it comes to outsourcing jobs overseas. In certain sectors (for example billing and call centers), if it’s done correctly, you can maintain quality while achieving savings of up to 50%.
Think of the time and money you save in terms of infrastructure, employee training, software and other technologies, it all adds up.
The larger your footprint, outside your country, the easier it is to structure your tax affairs to your benefit. Many large multinational companies like Apple pay their taxes in countries with low company taxes like Northern Ireland. Laws may vary from country to country so talk to your tax accountant.
Focus on core activities
It’s easier for a business to do a few things well, than it is to do many things well. One example would be soda. One business owns and manages the brand, another company manufactures and ships the syrup, while a third business bottles the product. The more you outsource what you don’t do well, the more competitive you become.
Lower Cost Good and Services
Ultimately outsourcing reduces the cost of goods and services. That then improves the spending power and living standards of consumers worldwide.
Easy to manage small projects
The internet has made it easy for small businesses to manage projects like data entry, software development and writing across borders. It is also much easier and cheaper to hire or fire these outsourced workers.
What kind of work does your business outsource?
The more your data and employees are spread out, the more difficult it is to protect your intellectual property. By signing and enforcing proper security agreements, with your contractors you can reduce your exposure to this risk. You will also need to know what the local laws are. In some cases the security risks may even out way the benefits of outsourcing.
What computer manufacturers have been doing is outsource the production of larger, simpler parts while producing the smaller, more complex parts in-house.
When it comes to the research and production of military equipment, outsourcing has even become a security problem for large countries.
Loss of focus
If you are outsourcing to a business that works for many companies and you aren’t a particularly large customer, they will not be as focused on your success, as you are. It may pay to find out who their customers are before you sign a contract.
You will need to keep a very close eye on quality and call them on it, if their standards drop.
Ultimately your particular situation will determine whether outsourcing overseas is right for you or not. It is however undeniable that many businesses have gained much, from their outsourcing efforts.