From startups to multinational enterprises, businesses of all sizes are catching onto the benefits of outsourcing labor. Using offshore employees has all kinds of advantages, but the main one is definitely cost savings. The amount saved can vary, but it’s usually pretty significant; it generally depends on which country the overseas employees are in. For example, tech support personnel in the Philippines will cost less than people doing the same job in Ukraine. Even so, regardless of the positions being filled, they can represent a savings of 50% or more compared to employees in the US.
How does the process work? It’s easier than you might think. Companies like Tier One Outsourcing act as middle-men between companies in more expensive countries (like the US or Canada) and overseas workers. This gives the companies access to as much or as little skilled labor as they need, for a lot less money and effort compared to hiring employees directly.
Top benefits of hiring overseas workers
Aside from the drastic cost savings by hiring cheaper international employees, there are a few other benefits to outsourcing labor. These are the main reasons why companies of every size are deciding that outsourcing is the right move for them.
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Lower costs
As mentioned above, there can be quite a bit of variation in how much is saved. In most cases, it’s at least 50%; in some cases, it can be as much as 90%. Why such a difference? This usually boils down to which country the international workers are from. Their wages are generally calculated based on their country’s cost of living; the less expensive the country, the less expensive the labor. However, it’s still possible to get skilled workers anywhere in the world. Just because a company is paying 50% of what they expected doesn’t mean they’ll get any less than 100% from their overseas employees.
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Use of global payment solutions
For the average person, the options are fairly limited if they need to pay someone in another country. Plus, there are often steep fees involved, which make many payment solutions (like PayPal) a terrible option if large or recurring payments need to be processed. When it comes to outsourcing, though, the third parties that work to connect companies with overseas labor already have global payment solutions in place. Even employees in developing countries can be paid using innovative technologies; at this point, it’s a standard part of the process.
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Reduced management and HR costs
It’s obvious that the average salary for many international workers would be a lot lower compared to someone in the US. However, the savings don’t just come from smaller paychecks; they’re also a benefit of using a business process outsourcing (BPO) company. BPO companies contract workers for businesses that would otherwise have to pay top dollar for their labor needs. As well as connecting businesses with outsourced labor, these companies also provide important services to contracted workers. These often include things like health insurance, HR departments, worker’s compensation policies, and so on. By using a BPO service, businesses won’t just be paying less for some of their labor costs; they’ll also get to skip many other costs associated with a sizeable workforce.
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Ease of integration with cultural norms
If a company is outsourcing to an international workforce, their new employees will likely already be familiar with the English language, Western culture, and even Western business norms. This is because outsourced labor is a highly competitive market, and BPO companies don’t just hire anyone. They look for people who are proficient in English, and provide training on what their employers will probably expect. When a business uses overseas labor, no matter what the job, they often find that their new workers adjust quickly.
Challenges you can avoid by hiring overseas workers
In addition to what can be gained (or saved) by outsourcing labor needs, there are also a few business pitfalls that can be avoided.
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Administrative red tape
In many cases, outsourcing becomes a strong option when a company has to scale up as quickly as possible. Consider what would be needed if the company were to do all their own hiring, training, and management for a workforce that had to suddenly increase. The recruitment process would have to happen on a rapid timeline, and hires would probably be made from limited options. There might not be much time for training, and there could also be a significant strain on HR as their workload suddenly increased overnight. If this process was happening in a small startup, some of these things may have to be formulated from scratch, such as training or HR services. This would likely impede the growth of the company, which is exactly what shouldn’t happen during a time of opportunity. Offshore employees, on the other hand, are ready to go at a moment’s notice. The training and management structure is already there, meaning they can start work quickly and without fuss.
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Investment in new employees
The hiring and onboarding process doesn’t just take time; it also takes money. Even for low-skill jobs, a certain amount of training is required; this also costs money. The more skilled the job, the more it costs to onboard each new employee. For just a few employees per year at a large company, this might not make much of a difference. For a smaller company that will need to rapidly increase the size of its workforce, though, this could seriously impact the bottom line. Plus, there’s always a risk that some of these employees will leave before the company gets a return on their investment. By outsourcing labor, the company won’t have to worry about any of these costs.
The takeaway
No matter its size, industry, or goal, any business would be smart to save money wherever possible. Using offshore workers is one way to do this, as it can save 50% or more on labor costs. Between this and other advantages, it’s no wonder that outsourcing labor is such a popular business strategy.
Interesting Related Article: “Offshore Software Development: Everything You Need to Know“