Benefits of Offshoring & Outsourcing

Benefits of Offshoring & Outsourcing Benefits of Offshoring Here are a few of the key benefits of offshoring vs outsourcing.

1. Access to low-cost labor The cost of living and the consequent cost of labor is high in the US compared to developing nations.

Moving part of your business’s operations to a developing country allows you to take advantage of the lower costs of labor for the equivalent job.

These lower costs can be passed on to your customers in the form of lower prices, making your company more price competitive.

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2. Access to better qualified labor Certain industries within your home market may be lacking in an available supply of qualified labor.

Comparatively, these industries may be stronger in foreign countries.

Offshoring these lacking aspects within your business allows you to employ better qualified workers, benefiting from the international pool of talent.

On top of this, certain jobs carry a higher prestige in developing nations compared to in developed nations.

Therefore, foreign workers may be more productive, resulting in greater efficiency for your business.

3. Access to better prices and increased knowledge A permanent presence within a foreign market allows your business to develop better relations with foreign suppliers.

In addition to this, it allows your business to gain a better overview of local prices, as well as preventing it from being stuck with a single third party supplier.

These factors give your business the potential to negotiate better prices, saving you money on costs, which can again allow your company to increase its price competitiveness.

Benefits of Outsourcing Outsourcing is also not without its advantages. Here are some of the primary benefits of outsourcing vs offshoring.

1. Increased specialization and quality of services Businesses are not experts at every task that needs doing - every business has an area in which they specialize, giving it the competitive advantage that makes them successful.

That being said, every business has essential yet time-consuming tasks that need to be completed.

By outsourcing these essential tasks to a third party, your business can better focus on its area of specialization, allowing it to further its competitive advantage, resulting in increased growth.

Similarly, in addition to allowing your business to better focus on its core area of specialization, outsourcing enables you to benefit from external expertise that is lacking in your business.

This results in better quality work being done, increasing the efficiency of your business, and the quality of services it offers.

That being said, this benefit is not exclusive to outsourcing - increased specialization and quality of services can also be achieved through offshoring.

2. Increased flexibility Hiring workers translates to increased employee package and salary costs, as well as long-term commitments.

Outsourcing avoids this problem. With outsourcing, labor contracts can be short-term and employee salaries and packages are handled by the third-party.

This means you can rapidly increase and decrease your labor force as required, allowing you to save costs in the long-run.

3. Cost savings Relocating your business’s premises offshore comes with a large initial investment cost.

Similarly, hiring in-house expertise comes with the cost of employee salary and package costs.

In most cases, your business can save on these costs by simply outsourcing the necessary business function to a third-party.

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