18 Oct 7 Reasons to Consider Offshoring
There are many substantial reasons to set up an offshore team to complement your Australian team.
Yes there are big cost savings, but you might not have considered the other opportunities that can improve your business, lower your risk, and impress your customers.
SEVEN GREAT REASONS TO CONSIDER EMPLOYING OFFSHORE STAFF
1. OFFSHORING HAS BIG POTENTIAL FOR COST SAVINGS
The primary reason why most Australian businesses set up an offshore team is for cost saving reasons. This is the obvious one, and many positions can be sourced in an offshore team at around one quarter of the cost. This alone gets many directors and shareholders excited, but its really only the tip of the iceberg of the benefits of setting up an offshore team.
2. REAL POTENTIAL TO IMPROVE CUSTOMER SERVICE
This might sound counter-intuitive that you can spend less on staff in your business, and yet end up with higher customer service. But the fact is that for decades Australian small and medium businesses have been stripping back their workforces to reduce costs, and now often have significantly less staff than what they need.
You can probably think of several areas in your business where you would like to add more people to get a better result, but you simply can’t afford to or the additional cost can’t be justified. With access to staff at a fraction of the price, you can boost your team size and impress your customers. Many hands make light work.
3. THE OPPORTUNITY TO BETTER MEET LEGISLATIVE REQUIREMENTS, AND LOWER DIRECTOR RISK.
Most small and medium sized businesses in Australia don’t meet all of their legal requirements, simply because the labour overhead is just too big to fill out every government form and do everything perfectly. With access to much lower cost staff you can have free hands to research legislated requirements, complete documentation, comply with OHS regulations, compile reports and make sure you are always on the front foot.
4. POTENTIAL FOR HAPPIER AUSTRALIAN STAFF.
Once again this may sound unlikely, that your Australian team is going to be happy about you sourcing staff in other countries. If any of your local team were to be displaced by a cheaper offshore alternative, many of those people are clearly not going to be happy with the outcome. However, managed in the right way, you can actually offer more opportunity and responsibility for your key Australian staff.
With your team size growing there is more opportunity for management and supervisory roles. You need to use Australians for these roles – that’s very important. There are also opportunities to have the tasks that Australian workers consider undesirable, given to their offshore team mates. The Australian staff will love doing more of the ‘fun’ work and less of the grind work, and your offshore team will love the opportunity to work with your business.
5. YOU HAVE A RESPONSIBILITY TO SHAREHOLDERS: GREATER PROFIT.
The Australian Corporations Act mandataes that directors must act in the interests of shareholders – that is, you have a responsibility to reward your investors, whether that be thousands of shareholders, or a sole director/shareholder. This could mean sourcing similar quality materials from a cheaper supplier, or in some way making operations more efficient to produce a better net profit – you’ve no doubt done that process many times in your business.
If staff could be sourced at half the price in a different state in Australia, there would be a rush of businesses to employ in that state, and everyone would agree that it’s a sensible interpretation of the Corporations Act, and that its in the best interests of shareholders. So why is it any different when it comes to the location of your staffing? If you can get a similar quality of people and skills at a fraction of the price, the Corporations Act tells you that you’re doing the right thing by setting up an offshore team.
Don’t forget that large corporations like banks all went through the offshoring process in the 1990s and 2000s, and most have complementary offshore teams running for more than a decade. If its good enough for the businesses which are seen as the “four pillars” of our economic strength, then its good enough for the Aussie battlers that are the directors of the SME sector.
6. YOUR COMPETITORS ARE ALREADY DOING IT.
Getting started now on offshoring now doesn’t make you an early adopter; that time has passed. Businesses from every industry are already setting up offshore teams. Many of your competitors are already offshoring, very quietly, improving their margins and strengthening their businesses for the new Wolrd economy. As the book “The Third Wave” discusses, in the next few years the price reductions that your competitors do to win more marketshare will start to kill businesses who haven’t re-engineered their businesses with a lower cost base.
We frequently get told by businesses that offshoring “doesn’t apply to my business”, that their business isn’t suitable or they don’t have any roles that could be done offshore. Meanwhile we have seen their direct competitors already doing it.
7. YOUR GOVERNMENT MAY ALREADY DOING IT.
We’ve been quietly told that the Australian government is using offshore labour also. Some forms at international airports are scanned into a database, and the database automatically reads the hand-written characters. A certain percentage of those forms are unreadable by machine and they need to be manually entered into the database. Even your government has some low-skill work done offshore where it’s a fraction of the price. Not only is this a more efficient use of your tax dollars, it potentially allows for a larger scope of work without exceeding the budget. A bunch of low skill, low security grunt work done cheaply, might provide extra data that helps to defend our shores against security threats.