Outsourcing, Offshore and Overseas: What Do I Need to Know?

Many successful entrepreneurs are faced with the eventual decision of taking their business global. Outsourcing and offshoring are two popular options for businesses to take their operations overseas. If you’re not familiar with the two terms, outsourcing involves moving some or all business operations to a third party whereas offshoring involves physically doing business in a different country.

Why People Do It

Although there are both benefits and risks to taking your business overseas, the benefits alone are enough for many businesses to go abroad. Businesses outsource their operations for several reasons but the most popular reason is to save money. This reason alone is why many companies with extensive manufacturing processes go offshore to foreign countries where manufacturing costs are cheaper.

While saving money is the main driving force for most businesses to hire outside the US, there are many other reasons businesses start operations overseas. Bilingual customer service, increased production, and establishing a foreign presence are just some of the many popular reasons why companies set their sights overseas. For example, some businesses find that offshore call centers are more affordable than their onshore counterparts. As a result, many businesses outsource call centers in foreign countries.

Why Some Avoid It

Problems can arise with outsourcing and offshoring operations to other countries. Even with modern technology, foreign workers are harder to manage, and there is the possibility that language and cultural barriers or even accents will frustrate customers. As a result, the quality can decrease, miscommunication errors arise, efficiency may drop, security risks to intellectual property may increase, and an overall lack of focus among employees can occur. This can lead to financial problems and customer complaints if the problem is not fixed.

Also, many US consumers feel that American companies outsourcing work to foreign countries is morally wrong. They believe American companies should strictly operate on American soil and benefit the economy here. By moving operations out of the country you could face public backlash and lose loyal customers as a result.

Should You Expand Your Business Overseas?

Just because it’s easier than ever to do business overseas nowadays doesn’t always mean you should jump right in. Before deciding if you should take any of your business operations overseas, you should examine your business and point out its strengths and weaknesses. If you feel like your business can benefit by going overseas then consider the ups and downs of conducting business overseas. Consider your consumer base and their preferences. Determine whether it’ll make your team more efficient and grow your business.

Taking some or all of your business operations overseas can be helpful or detrimental to your business. Before making the big decision, make sure you look at the benefits and risks and determine whether outsourcing or offshoring is right for you.

Looking to outsource your business? Schedule a business consultation with us today to determine any legal road blocks.