Offshore, onshore or nearshore?


Offshore, onshore near-shore, or just do away with outsourcing and insourcing?

Small and medium businesses are in a global sourcing environment. Enterprises can still rely on offshore operations for low-cost manufacturing and production. However, offshoring has become more complex. Technology has transformed it into a business tool.

Businesses can outsource processes through BPO companies. They can provide business solutions for IT, back office, and administrative needs.  SMEs can lease staff, set up an offshore facility, or outsource a project.

With all the options available, where exactly should you anchor your business?


Types of Outsourcing


Outsourcing doesn't necessarily mean offshoring. To make it clear, here are the different types of outsourcing based on location:

  • Offshore - outsource work to another country that is relatively far from where the client is located
  • Near-shore - outsource work to a neighbouring country
  • Onshore - outsource work to a different company in the same country

Insourcing is the opposite of outsourcing. Services that would have been outsourced are done in-house (performed within the company).

The Variables


There are several factors that need to be considered before you outsource. Apart from the basics, SMEs also need to consider regional issues.

  • Currency Fluctuations - Foreign exchange rates affect arbitrage. Your business earns in dollars but you pay based on local pricing. 
  • Financial Health - The outsourcing destination must be able to overcome its own economy's rough patches to sustain a partnership. This is very important for long-term contracts. 
  • Local Niche - Each outsourcing destination has its own forte. SMEs can turn to the Philippines for IT and call centres. Vietnam and Indonesia, on the other hand, are good spots for manufacturers. 
  •  Local Risks - Offshore operations are vulnerable to unpredictable risks such as political issues and natural disasters. 

So Where Should You Outsource? 


Location should be a contributing factor, not the main driver.

It's not where you should outsource. It's how you can establish the right arrangement that will answer your needs and add value to your business.

In order for SMEs to become competitive, they must adopt the most efficient processes to standardise their operations. To achieve this is actually simple. Outsource business processes to the right service provider with proven solutions and technology. Through this, SMEs can increase efficiency and productivity on top of cost savings.

Of course, executing this business decision is not simple, but the logic is. Ignore the catcalls surrounding offshoring. What you need is to leverage all viable options to thrive and remain competitive in a global marketplace. In turn, you can level the playing field with corporate giants despite your size. 

Post a Comment

Template developed by Confluent Forms LLC; more resources at BlogXpertise