3 Reasons Why You Shouldn’t Hold Back on Your Offshore Outsourcing Budget
It’s not debatable anymore whether or not offshore outsourcing, particularly in the support services industry, can help you cut down costs. The only question now is how you can do this without sacrificing quality and still remain innovative and relevant to your customers.
Most business consultants will tell you to hold a tight rein on your spending when you’re outsourcing work to an offshore provider. Tightening the purse strings certainly helps, but there are instances when making a small investment in your outsourcing strategy will result in greater returns rather than simply minimizing your expenses. Here are three reasons why you should discriminate between a worthwhile investment and a wasteful one in your outsourcing budget.
#1 Your business has greater technological needs and it will have to adapt to frequently evolving technologies.
Upgrades cost money, and so are decisions to change from one software brand to another. You may think you can always rely on GUI-licensed technology to save costs, but most SaaS providers only provide their services for free to individual users. Enterprise-grade software with strong security features will need additional support from a bigger team of developers. This definitely costs money. If you have specific needs when it comes to technology, better splurge on the highly recommended brands because they provide extensive support, exclusive features, and greater security for businesses.
#2 You’ll have to consider the costs of doing business in another country.
When you outsource to an offshore location, consider the costs of transacting business with a service provider in another country. You’ll be hiring employees from that country, and they’ll be governed by that nation’s labor laws. Many countries have paid leaves, which are not commonly available to employees in the United States. The Philippines, in particular, has a legally mandated 13th Month bonus that’s distributed to all employees every December. The amount paid will depend on the number of months in a year that the employee has worked for the company.
These additional labor costs are normally included in the monthly rates charged by the service provider, so don’t be surprised to see several outsourcing companies in the Philippines charging mid-range and above rates. You will also find ridiculously inexpensive ones, but you may end up paying more than you expected. Nobody likes to be surprised with additional costs that were not discussed before the contract was signed.
#3 Keep in mind that you’re paying for the level of education, expertise, and reliability of your offshore staff.
Almost all call center workers in the Philippines have college degrees. Customer support teams for healthcare accounts are likely composed of nursing graduates who had some experience working for clinics and local hospitals. Many customer service representatives likely came from jobs in the hospitality and food services industry.
All these jobs require your employees to have knowledge and skills unique to these niches as well as the innate ability to show compassion and sensitivity towards your customers. Essentially, you’re paying for qualified staff and the value they add to your business.
If your business has expanded its market reach to parts of Asia, then it’s more than wise to hire customer-facing employees and back-office support staff from that part of the world. It’s much more practical than relocating employees from your domestic office to another country.
How to Prevent “Bill Shock” in Outsourcing
While bill shock is more common in telecommunications, it’s also a possibility in offshore outsourcing. Some outsourcing companies will let you hire one or two people at first just to give you a taste of what it means to outsource. Hiring one person from an offshore firm is not practical, however, because you can have the same benefits by hiring a home-based freelance worker from Upwork.
It’s highly recommended that you start with two or three people and work with them for three months at the very least. After this period, you can substantially evaluate the performance of your staff and see whether it’s wise for you to expand your team or to keep it small. A three-month period is the soonest that you’ll be able to see significant changes in your operations.