Offshoring is a great way for businesses to save time and money. Unsure how exactly? Read on to learn how offshoring can be a cost-effective business model.
Companies can reduce their overhead expenses and improve their bottom line when they outsource work or processes to countries with lower labor costs. This reason alone is why many businesses continue venturing into the waters of offshoring.
The offshoring business model is not new. In fact, it’s been a solution for many companies, big and small, to cut operational expenses. This model started in the early 60s when large corporations relocated their manufacturing operations to other countries with lower costs on labor and raw materials.
Today, it’s not just the manufacturing industry that’s dominating the offshore scene.
More recently, the IT revolution opened doors for the tech and telecommunications industries to prosper—from BPO to R&D to software development. And it’s only continuing to grow because of the widespread benefits of offshore outsourcing.
How Offshoring Can Save Time and Money
Saving time and money is the major reason why offshoring is so popular among businesses today. Because who doesn’t want extra money in their bank account? And these savings could go a long way, especially for businesses with a tighter budget.
If you’re an entrepreneur who wants to save money, consider looking into offshore opportunities. In this blog post, we will discuss six ways offshoring can help your business save time and money.
#1—Offshoring reduces labor costs
First, offshoring can help your business save time and money by reducing labor costs. By outsourcing work to countries with lower labor costs, companies significantly experience lower production costs on their product or service.
If a company outsources its software development team to a country like the Philippines, it can expect to save up to 50% on labor costs.
For example, a React developer in the United States has an average hourly rate of $45. In the Philippines, the average hourly rate of a React developer is around $20.
But are offshore developers less talented than their American counterparts? The answer is NO. The offshore software developer rate is proportional to the market rate influenced by the local economy in their country.
#2—Offshoring maximizes time flexibility
A second way offshoring can help your business save costs is by increasing flexibility. How? Offshore outsourcing is an unorthodox business setup that aims to solve many business problems. These problems include constraints with respect to time and resources.
When you offshore your business processes, you can leverage the time difference between you and your offshore team to your advantage.
For example, in software development, you work at flexible working hours that suit your setup with your offshore team. When your regular 9-to-5 day is done, you can hand over the tasks to your offshore team so they can continue the work. In this setup, you can expect continuous customer support and faster product delivery to your customers.
#3—Offshoring reduces turnover costs
Employee turnover is one major business headache. You have to expend the time it takes to look for a new employee. Plus, you also have to pay for the productivity lost during the turnover period.
In offshoring, you can expect more money and time savings during employee turnover. When you hire an offshore team from a service provider, they handle the employee management to keep your team satisfied and well-compensated.
Should a resignation takes place, offshore service providers usually have a pool of talent ready to deploy. So, the time it takes to find a replacement reduces, and you can get back on track with productivity faster.
#4—Offshoring improves product quality
When you explore offshore outsourcing opportunities, you also get access to a wider pool of professionals. This is good news for those in the IT industry since there is an ongoing tech talent shortage in the United States.
That said, tapping a whole new talent pool means that you can hire the right professional for your specific needs—and possibly the best at that. As a result, your product quality can improve since you now have top-notch talent through your offshore service provider.
Great professionals mean faster product delivery, equating again to more time and money savings!
#5—Offshoring provides better customer service
One of the reasons for offshore outsourcing is to bring on professionals who have the right skills required for the job. In this way, your customers receive the best version of your product or service possible on their end.
Remember, when you find people who love what they do, they provide better service. Offshoring widens that talent pool, allowing business owners to find better customer service.
When you have skilled individuals working on your product, you can focus more on your business’ other core competencies. Get more time on your hands when you go offshore.
#6—Offshoring cuts down overhead costs
Finally, another way offshoring saves you money is by lowering your overhead costs. The key to remember here is offshoring to countries with lower rental and equipment costs.
Operations in your home country incur real estate and equipment expenses. When you offshore, you pay lower costs on office space rent and device purchases. Additionally, partnering with offshore service providers could even slash overhead costs for you completely.
Let’s say you want to offshore your software development. Offshore service providers, like Full Scale, equip their employees with the tools and devices needed for work.
And with the remote work setup, you no longer have to rent out real estate for your team. Offshoring is the best way to save money!
Save more when you partner with Full Scale
Offshoring is a great way to help your business implement cost-effective strategies. The perks we listed are just a few of the ways offshoring can help your business save time and money.
If you are thinking about outsourcing your work, consider these six ways offshoring can help your business save time and money. You may be surprised at how much you can save by outsourcing to countries with lower labor costs.
And Full Scale makes it easier for you to offshore your tech startup business!
We are a software development service provider based in Kansas City. Through our offshore arm in the Philippines, we help our global clients scale their software development teams. Check out our assessment process here:
Full Scale takes care of the entire recruitment process, so our talented professionals can join your team equipped and ready.
Our client dashboard platform also makes it easier for clients to browse specific professionals who have already been screened, interviewed, and assessed. So with Full Scale, you get the best of both worlds in saving time for recruitment and hiring competent developers at an affordable rate!