The article discusses 6 Ways Outsourcing benefits the Global Economy.
6 Ways Outsourcing Benefits the Global Economy
Introduction
Ever wondered what outsourcing could do for your business? Outsourcing involves taking business tasks and sending them to another country or continent to be accomplished by a third party. It is further divided into two types:
Nearshoring happens when outsourcing to a nearby country, often to one that shares a border with the source, and
Farshoring for when the service is outsourced to a distant country.
The practice has been used to serve millions of clients globally, providing them with the benefits of cutting costs and performing services remotely. It can help with many aspects of your business, from production to customer service, thereby gaining significant cost benefits. The question on everyone’s mind is how? And what are some of the benefits of outsourcing overseas?
Outsourcing Benefits
1. Control costs
Outsourcing your business to a country with lower labor costs can help you reduce your company’s total costs. This is because outsourcing companies often have access to workers who are willing and able to work for less than the local market rate, which helps you keep your overhead costs down. For example, if you’re outsourcing a job in China for $1.00 per hour and paying an American employee $3.00 per hour, then you’ll be saving your business $2.00 in expenses, and in this day and age, every dollar saved helps.
The best way to understand how much time and money these savings will benefit your company is by considering all of its benefits:
- Lower taxes – Outsourcing reduces taxes owed by companies based on where they do business; as such, they often receive government incentives designed specifically toward encouraging them into certain industries or regions. These incentives can be substantial enough that, depending on the location and the tax breaks your company will get.
- Increased savings – Just how far does your dollar stretch? In terms of outsourcing, it really depends on the location. You need to take into account a particular country’s cost of living and its average income when choosing where to outsource your company’s tasks.
2. Gain access to skilled talent
Quality talent is the most important factor in any business. Global outsourcing allows you to access skilled workers from around the world that fit your business needs and budget. While you can certainly choose to recruit from local talent, their skills and rates may not be what your business can accommodate for now. Looking outward will provide you with the right people, with the right expertise, at a fraction of the cost you might spend from hiring and training locally.
This is where global talent becomes an asset: by bringing in skilled personnel from other countries (and possibly other industries), you can ensure that everyone will have specialized skill sets and experience levels no matter what industry or job title they hold at your company.
3. Build a strategic and competitive advantage
Outsourcing is one of the best ways to create a strategic and competitive advantage for your business. It allows you to focus on your core competencies, which are things that make up the foundation of your business model. For example:
You can outsource customer service so that you can focus on growing as an e-commerce company instead of having employees answering phones all day long. This will also help reduce operating costs because there won’t be as many people in various positions with salaries and benefits attached.
Likewise, by outsourcing certain tasks like web design or software development, companies can grow their revenue faster than they would if they were doing them themselves since these areas do not require as many resources or expertise from within the organization itself—and thus allow them more flexibility when deciding about what direction should be taken next.
4. Increase operational flexibility
With global outsourcing, you can:
Adapt your business model – If a new technology or business model emerges, you don’t have to start from scratch and build an entirely new system for it—you can instead leverage the expertise of an outsourced team of programmers who have been working on this type of application for years.
Respond quickly to market changes – If there’s an opportunity in the marketplace that your company is missing out on (or if one has just arrived), it’s easy for you as a client because all the work gets done by someone else. If you don’t have the time or resources to spend on researching new technologies, you can instead tap your offshore team to handle the work, freeing you up to focus on things that are more your expertise.
5. Provide scalable solutions
Operating a business means making adjustments based on operational needs and market demands. Having an outsourced staff frees you up from responsibilities such as the hiring, training, and onboarding of new employees which can be costly and takes up a lot of time and manpower.
That’s why it’s important to choose the right outsourcing partner as they could definitely be an asset for growing your business. You need the right people, the right services, and the right solutions to make it all work, so choose wisely.
6. Give jobs that pay well to your outsourced team
Outsourcing doesn’t just benefit the company practicing it, but it also allows the outsourced talent to enjoy huge earnings that they may not enjoy somewhere else.
While it is true outsourcing is a cost-saving measure for many companies in the world, due to differences in currency value, plenty of business processing and outsourcing (BPO) employees get to enjoy premium wages compared to those who earn their salary from local jobs. It’s a reason why jobs in the industry are much sought-after by fresh graduates and older workers alike.
And these gains trickle down to the local economy as the workforce start earning better wages; better wages mean better purchasing power which helps the economies of the host countries. Whichever way you look at it, it’s a win-win situation for everyone involved.
Tap into top-notch global resources with outsourcing
Global outsourcing is a cost-effective way to tap into the resources of multiple countries. This allows you to:
- Gain access into global talent and expertise at lower costs than hiring from within your own country or region;
- Save time on recruitment, training, and onboarding of new employees;
- Provide BPO employees and their families with premium wages, and thereby;
- Contribute to the growth of the servicing country’s economy through job creation and by uplifting the livelihood of the local workforce.
The choice is yours, but as you can see, global outsourcing is a business practice that benefits one and all.
References
“12 Key Benefits of Outsourcing | Outsource Accelerator.” Outsource Accelerator, https://www.outsourceaccelerator.com/articles/12-key-benefits-of-outsourcing/.
Allnutt, Charles. “The Benefits of Global Outsourcing.” Outsourcing Philippines | MicroSourcing, MicroSourcing International Ltd., 20 Feb. 2022, https://www.microsourcing.com/learn/blog/the-benefits-of-global-outsourcing/.
“Average Income around the World.” Worlddata.Info, https://www.worlddata.info/average-income.php.
“Cost of Living in a Global Comparison.” Worlddata.Info, https://www.worlddata.info/cost-of-living.php.
“Offshoring, Nearshoring, Onshoring & Outsourcing – InterVenture.” InterVenture, https://www.facebook.com/InterVenture, 14 May 2019, https://www.interventure.info/blog/offshoring-nearshoring-onshoring-outsourcing-characteristics-differences/.
