What is Offshore Outsourcing?

Offshore outsourcing involves subcontracting a service or process to an external non-local company in return for increased efficiency, cost reduction or scalability.

What are the advantages?

The primary objective of offshore outsourcing is cost reduction. This is achieved by accessing lower cost economies, which offer significant savings in labour and manufacturing. Reducing the overall costs of a business allows it to benefit from greater profit margins and take a more competitive standpoint in the market.

Secondly, outsourcing harnesses the scalability advantages of a more variable cost structure. This cost restructuring allows a business to have a more flexible approach to expansion without significant investment. Growth that could not be achieved alone is accelerated by the capacity management of the outsource company. As a result, the business becomes more fluid and adaptable to market change, with lower risk and reduced lead time to market.

The third key advantage of outsourcing is the access to a higher level of expertise and knowledge, creating a higher quality of work. Through outsourcing, a business can benefit from a highly skilled pool of labour without the associated problems of in-house employment. 

How does offshore outsourcing work?

The decision to outsource begins by analysing areas of potential cost reduction - these can range from human resources, web development, customer service, market research or any element of the business that has the potential to be delegated to a third party. The current costs of running these elements of the business in-house are then compared to the solutions offered by outsourcing. The advantage of using an outsourcing company allows the business to avail of the most suitable outsourcing solutions that are tailored to its needs, without liaising directly with the providers themselves.

Who can outsource?

Any business, regardless of its size, can take advantage of the benefits that outsourcing provides. Current communications technology allows the simple global transfer of work, which can be arranged quickly and easily to suit your business needs. A business can choose to outsource as little or as much of its work in order to reap the rewards of cost reduction, scalability and higher quality standards. See 'Key Concepts' for a more in-depth explanation of how these concepts relate to outsourcing.