What is Offshore Outsourcing?

What is offshore outsourcing?

From the perspective of professional services.

Offshore Outsourcing Trends

Understanding the Global Business Strategy


In the last decade, offshore outsourcing has emerged as an alternative human resourcing strategy to gain access to a wider pool of talent that simply isn’t available locally.


Globalisation and technological advancements made it even easier for companies to manage cross-border operations. This practice is often motivated by the desire to capitalise on cost efficiencies, tap into a skilled workforce, or benefit from economic circumstances.


The result are that firms that engage in offshore outsourcing have greater scale, capability and resources to be able offer a wider range of services and better customer service.

Key Differences

Outsourcing v Offshoring

Defining what the key differences are between the models and how this impacts your control of the service or operation.

Outsourcing refers to the practice of engaging a third party to carry out specific business functions outside of the operations of the company. It is an external relationship which focuses on providing a specific deliverable or service.



You will have a supplier agreement and they deliver services as and when needed. Usually, the agreements are based on specific deliverables (think of outsourced web design for example, you pay for the deliverable of the website) or an ad-hoc service (think of outsourced IT, you pay a monthly amount for access to IT requests as and when needed).


Outsourcing generally has far less control than doing it in-house. However, you outsource when you do not have the skills or budget to bring it in-house.


Offshoring, in contrast, is the decision of relocating certain business operations to a foreign country to access that talent pool.


Offshoring is more like an ‘in-house’ model albeit the house is in a different region. The company still retains control of the relationship and has full oversight to bring the staff into their processes and systems.


Businesses that pursue offshoring aim to benefit from the plus points presented by a globalised economy, where various regions provide unique benefits related to cost, skilled workforce, or resources.


WHEN DONE RIGHT

Advantages of Offshoring

  • The biggest benefit of offshoring from our experience at Felcorp is that there is simply a bigger talent pool of qualified staff than there is in the local market. Firms are simply coming to the decision that the candidates are taking too long to fill positions and junior staff with little experience are just commanding salaries significantly higher than what they can bill out.



  • By offshoring certain business functions, businesses can concentrate their resources in the most productive way. They can shift their process and workflow to be able to offload less valuable work to the offshore team and prioritise higher billable opportunities. 



  • Another benefit, but not main reason firms engage offshore staff, is the opportunity for substantial cost reductions. Wage disparities in Philippines, India, Malaysia, Vietnam and Sri Lanka is significantly lower than Western nations. Up to 50-70% cheaper than local wages.


WHEN DONE POORLY

Disadvantages of Offshoring

One disadvantage of offshoring is the increased difficulty of getting something set up and at a productive state for the business. As the offshore operation is far away, it can be difficult to get offices, HR, recruitment, and other processes in place. This is especially so if you are not familiar with the local business laws and how to set up an offshore operation.


Many firms make the big mistake of going direct to staff without any formal or professional HR operation looking after the staff.


Most of the time, staff are working from home and there are little protections in place around data security, client privacy, adherence to local laws or compliance with the company policies. It is very difficult to track employee fidelity and compliance when there is not in-person management observing staff behaviour everyday.

HOW TO GET IT RIGHT

Recommendations to begin offshore outsourcing


When you begin an offshore relationship with staff, please ensure that you go through a professional offshore staff provider that can enforce Australian data security, employee fidelity policies and compliance with your company policies or industry standards.


Whether you use Felcorp Support or any other professional offshoring partner, make sure you have a risk framework that clearly details the following:


  • contractual agreement with the provider,
  • staff performance guidelines and expectations
  • data security framework
  • staff productivity metrics and timesheet/activity audit logs

 

At Felcorp, we have developed a risk framework that we provide to our firms to address how we meet not only statutory standards but also risks that we see on the horizon that will eventually be passed in legislation.


WHO WE ARE

Why choose Felcorp Support

Defining what the key differences are between the models and how this impacts your control of the service or operation.

More About Us

We are Felcorp Support - a professional offshore financial service company. We provide high-quality and cost-effective offshore staffing solutions for your unique business needs. By leveraging our expertise in financial planning and accounting industries and its understanding of global markets, Felcorp offers a range of services that help businesses manage their financial operations more efficiently and effectively.


One of the key strengths of Felcorp lies in its ability to tailor its services to meet the specific needs of its clients. Whether it's handling complex accounting tasks, managing tax compliance across multiple jurisdictions, or providing robust financial reporting, Felcorp ensures that its clients receive personalised and reliable support.


If you are looking to optimise financial operations for your business, Felcorp can help your business thrive in today’s competitive global environment through its commitment to maintaining high standards of accuracy and compliance.


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