Risks and benefits of using offshore outsourcing (part 1 of a series)

Posted on Posted in Blog

Offshore outsourcing though not a new trend in getting your needs done is getting some boosts nowadays. With people outsourcing everything from software to marketing to search engine optimization to just about any services they need, this trend is going to be around for some time with the coming year expected to boost it further.

Small and Medium enterprises especially those that are online based are the usual businesses that make use of offshore outsourcing. Here are reasons why some of these thrive on having their needs supplied by offshore outsourcing providers:

The cost is low. The cost of having your needs (ie software needs) done by US contractors are naturally high which is due to the cost of labor in the US. In the whole US, according to the Bureau of Labor Statistics, private service providing which local outsourcing companies can provide, costs an average of $19.28 per hour. That is way above the cost of labor for Filipinos in the NCR costs in one day at $5.86 (2006 estimates). This estimate may be 5 years ago, but even if the current rate is two times this one, it is still less than 40% of the cost in the US, and that data is for a whole day.

Comparable results with Local Providers. Even though US cost of labor is very high, the results if you outsource to offshore outsource providers is comparable. For example, Indian and Filipino outsource providers are trained in Universities and Colleges offering trainings in these outsourcing fields. With these high educational standards, I’m sure these outsource providers have the knowledge and know how to provide you with the best output.

Benefit with crowd sourcing. With the low cost of labor, comes the benefit of outsourcing to more than one contractor or worker. There are many outsource providers in the internet and they’re all trying to outbid each other in the few jobs available to them. So an internet marketer for instance may hire 8 workers for as small as $2.50 per hour and get the benefit of having 8 workers working for a job that could be done by only one person if hiring is done in the US. Crowd sourcing is expected to be a trend in the coming year with most providing jobs in the Marketing (both Search Engine and Social Media).

As with any different methods with great benefits, there would be risks involved also. But there are methods also to mitigate the risks. The benefits outweighs the risks, so there will still be companies in the US and Developed Countries elsewhere that outsource almost all of their services needed to the offshore outsource providers.

I’ll be posting more on the risks and how to mitigate them on part 2 of the series.

Veba Software is a Filipino offshore outsource provider providing software needs to clients. They also provide Direct and Indirect Marketing services through SEO and SEM.

Leave a Reply

Your email address will not be published. Required fields are marked *