No matter their size, industry or ultimate goal, nearly every single business that pursues offshore outsourcing does so for one key reason: cost savings.
While each business has different skill and personnel gaps that it’s looking to fill, cost is the driving reason behind outsourcing 99% of the time. And that’s completely fine – if you understand how to gain value, not just save dollars.
Despite being driven by a common goal, some businesses achieve much better cost savings and long-term value than others. Funnily enough, it’s usually the smaller and newer businesses who get more out of their outsourcing investments.
When businesses focus on immediate cost savings and forget to think long-term, they’re going to end up spending more and achieving less.
But with a little strategic planning, you can save money and gain long-term value for your business at the same time. Here’s how.
Low cost usually means low quality
A lot of outsourced providers will compete on nothing but cost, knowing that many businesses will choose a provider purely based on how low their hourly rate is. When the approach is “we just need a body to fulfil this task” a rock-bottom rate sounds like a good deal.
There are a few roles for which this can work well – anything that doesn’t require specific skills, training, or business knowledge. But most positions require more than just a warm body.
Simply going for the lowest hourly rate often results in the most common complaint in offshore outsourcing: “I spend time training up staff but then they keep leaving.”
Offshore outsourcers are notorious for high staff turnover, which can lead to a constant cycle of replacing and retraining staff – and a low competency rate and poor outcomes for the businesses they’re supporting.
Why does this happen? Well, the lower the cost, the less room to move. This can often mean a less than ideal work environment for staff – lower pay, fewer leave entitlements, and fewer progression opportunities. If staff are not incentivised to stick around, they probably won’t.
Cost vs. permanency – do you have to choose?
The short answer is no – if you think strategically.
This might all sound like to get competent and more permanent staff you have to lose the cost benefits of offshoring. But that’s not the case.
It was mentioned above that some businesses get better outcomes than others when it comes to offshore outsourcing. This is because they’re looking for not only cost savings but also a specific skill.
Usually, they want to fill a position onshore, but it isn’t yet a financially viable option. They want a cheaper option, but they also want the job done well and have a JD and KPIs in place for it. So, while cost is a factor, it’s not the only one.
The best bit about this is that most of the time, these businesses aren’t planning for longevity – offshoring is a gap-fill until they can afford to hire for the role closer to home. However, a lot of the time, they’ll find it’s not necessary to rehire because the arrangement is working so well. In fact, they’re more likely to put more roles offshore than bring any back home.
Adding quality offshoring into your business strategy
So, why does this approach work better?
When you focus on the individual and the skill you need them to provide (and not just the cost) that employee is more likely to grow, develop, upskill, and bring incredible value to the business in their role. They will stay longer and perform better.
Your business not only saves money on salary costs but will see ROI increase exponentially with long-term value added in the form of more permanent skilled staff.
While often this outcome is a happy coincidence, a more strategic approach means you can actually plan to add ROI and long-term value with your offshoring hires. The key to achieving this is:
- Don’t be swayed by the cheapest option – it will likely lead to the poorest quality outcomes.
- Consider what you need from a new team member before hiring – this includes skills, capabilities, performance outcomes, etc.
- Think about your business growth goals – could a strategic offshoring approach enable you to meet them faster?
- Make sure the outsourcing provider is doing right by their staff – you want to make sure they’re meeting local employment requirements and that you’ll get longevity from candidates.
- Understand your Minimum Viable Product – think about the MVP you need your outsourcer to provide and then consider what additional value someone in that role could deliver if they had the opportunity to develop and grow.
Delivering long-term value offshore
Some businesses find it challenging to shift their mindset from offshore only = super cheap resources. But slowly, we are seeing a shift.
More businesses across the world see the benefits of strategic outsourcing (especially as the costs and availability of onshore talent become more unsustainable).
At Omada One, we’ve built our business around the idea that if we look after our staff, they will look after our clients – and their businesses. We do this by offering more benefits, opportunities, career progression and individual recognition.
We even invite businesses to meet us and our staff (either online or face-to-face) to see candidates, processes and culture firsthand, which helps them understand how outsourced staff would fit into their business.
By helping to create JDs and KPIs to ensure staff are meeting performance objectives and business goals, Omada One acts as a strategic consultant to find avenues for staff to add more value (and savings) to your business over time. We also why we revisit, review and reset the KPIs at every phase of our implementation methodology.
For more information on how to look past “gap-fills” and add strategic long-term, lower cost value to your business, get in touch.
