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Who’s afraid of big bad offshoring?

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By Scott Stavretis, CEO, Acquire BPO We live in an era of ever-increasing globalisation. The world has become a global market as all sizes of businesses reach beyond domestic borders as technological advances accelerate globalisation’s momentum. But not everyone subscribes to globalisation. One of globalisation’s offsprings is offshoring, which also has backers and detractors. However, rather than being a threat, offshoring yields immense benefits for companies and countries that offshore, and for destination companies and countries discharging the functions.

Another alleged negative is that companies may lose their competitive edge by outsourcing research and development  or IT, including software, mobile and game development.

Companies resort to offshoring for many reasons, such as seeking reduced business costs from lower overhead and salaries, achieving strategic objectives including being closer to target markets, and looking elsewhere for skills and resources in short supply.

Drawbacks of offshoring

Critics of offshoring say it takes jobs away from nationals, resulting in unemployment and other economic repercussions. Another alleged negative is that companies may lose their competitive edge by outsourcing research and development  or IT, including software, mobile and game development. These arguments have some merit, but for every threat, there are opportunities to counter it.

Jobs lost offset by jobs gained

While developed countries grumble about jobs taken by offshoring, the total number of jobs lost is actually offset by jobs gained. Globalisation means that economic activity occurs for both outward and inward job opportunities. When American companies “lose” jobs sent abroad, the country also “gains” jobs as foreign firms invest there. To illustrate, South Korea’s Samsung challenges its competition, Apple, on its own turf. Therefore, it sets up plants in the U.S. and hires feet on the street to promote its products and services directly to U.S. consumers.

Cost savings is not the primary consideration

Another complaint about offshoring is that companies will do everything to decrease expenses that are lower in the outsourcing destination countries, resulting in lower quality work done abroad. This perception is inaccurate. Companies that offshore successfully do so because they look for best value, not just lowest cost. And best value is achieved by seeking the right blend of reduced costs and high quality — quality that is ensured through ironclad service level agreements, established continous process improvement, focus on key performance indicators (KPIs), among other indicators of mature processes. The following are other important benefits from offshoring. Sources for skilled manpower. Companies in developing countries offshore services because they cannot find enough human resources with the required skills. For the healthcare outsourcing market alone, global companies offshore their labor-intensive IT management processes because different government regulations require voluminous documentation. Similar skilled manpower shortages exist for creative services, and even R&D outsourcing. Any single country does not have a monopoly on talent and if a company wants to compete on a global scale, it has to also look outside its home market. Concentration on core business. Since labour-intensive functions are commonly offshored, companies are able to free up the time of their valuable resources to concentrate on the companies’ core business. Even management responsibility over employees is transferred to offshoring providers. ________________________ So who’s afraid of what doomsayers consider the big, bad wolf that is offshoring? Offshoring’s benefits far exceed its drawbacks for both offshoring and destination companies and countries. The benefits are amplified when you choose a competent and trusted offshoring partner with a solid track record in a variety of services and industries.
Scott Stavretis, CEO, Acquire BPO
Scott Stavretis is the CEO and a founding director of Acquire BPO with over 15 years of executive management experience. Acquire employs nearly 7,000 experienced professionals and operates twelve state-of-the-art contact centres across Australia, the Philippines and the Dominican Republic. Acquire services a wide range of industries including telecommunications, banking and financial services, insurance, media, education and retail. These services include customer service, sales, technical support, retention campaigns, network operations, back-office functions, software development and marketing services which it provides to a range of private and publicly listed companies around the world.
June 23, 2015
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