There are numerous benefits of offshoring. The best offshoring destination for your business is dependent on different criteria. For instance, what function is being considered to offshore? If you need to offshore software development, it is quite different than outsourcing back office functions. Also, worth considering is do you need workers available during your work hours? When considering these questions, topics like offshoring and nearshoring will come up. Statista recently published a report on the top countries for offshoring. The results are interesting.
Offshoring, Nearshoring and BPO
Before discussing the best offshoring destinations let us think of the basic definition of offshoring. Offshoring is the relocation of business processes from one country to another. Offshoring can be manufacturing in a different country. However, it can also be outsourcing specific business functions to an offshore location. Offshoring can sometimes be referred to as labor arbitrage. Let us also take a moment to consider nearshoring.
Nearshoring is the same concept as offshoring, but it is locating roles in an offshore country in closer geographic proximity. Examples include EU companies outsourcing to Eastern Europe or North American companies outsourcing to Latin America. Finally let us define BPO which stands for business process outsourcing. BPO often comes up when discussing outsourcing and offshoring. BPO is the practice of hiring a third party company to do outsourced office tasks. Outsourcing entire departments or substantial portions of departments offshore is considered BPO.
Accounting, finance, customer support are leading examples of BPO services. There are many advantages to outsourcing and leveraging offshoring nearshoring and BPO. The largest one is cost savings. Labor costs can often be reduced by up to 70%. BPO arrangements can be more flexible plus free of local regulation. BPO and outsourcing can provide access to larger talent pools. Finally, BPO outsourcing can provide access to 24 x 7 service and support.
Top Countries for Offshoring
India has been by far the top country for BPO offshoring. India and the Philippines are typically the top two countries for outsourcing and offshoring call centers. When it comes to software development, and offshoring development centers, choices can be different. Ten of the best offshore development countries include India, China, the Philippines, Poland, Hungary, Ukraine, Brazil, Argentina, Egypt, and South Africa.
Nearshoring is increasing in popularity as companies desire to have offshore workers close to a home market and in the same time zones. Popular near shore destinations for European companies include Hungary, Poland, the Baltic states, and up till now Ukraine. Popular near shore locations for US and Canada have included Argentina, Brazil, Mexico, Colombia, and Chile. Popular near shore locations for Asia include India, the Philippines, Vietnam, and Indonesia. India, the Philippines, Vietnam, and Indonesia are also popular offshore locations for all regions. Many other countries, however, can enter the mix when you are thinking strictly of BPO, and not necessarily software development. Valenta for example has opened up a BPO service center in Trinidad and Tobago in the Caribbean.
What Makes a Country a Good Offshoring Destination?
To determine if a country is a good offshoring destination you will first need to be clear on the roles needing to be outsourced. For example, we will need to determine if they are BPO and back office type roles or if a business is looking at offshoring development centers. A strong workforce for accounting and finance will be required in the former. A top notch workforce in the areas of IT and software development will be required for the latter.
The primary driver for a good outsourcing country is educated workers. Because of this, evaluating a country’s educational infrastructure will be important. Good English speaking skills are critical since English is the language of business. Other language skills are also important. Having access to a worker pool that has additional language skills can be an important criteria. A youthful workforce is often desired when considering a good offshoring destination. Young workers are often eager to learn and to succeed.
A cultural proximity is also important. Similar work ethics and cultural alignment can make integration easy. As previously mentioned, geographic location is also important. The primary driver for this is time zone. Workers in other countries may work shifted hours. Much of our staff in India for example work what would be termed second shift hours in the US so that they can be available mornings in the US.
Many of our staff in the Philippines work what would be termed third shift hours in the US for the same reason. Being able to communicate during normal working hours with offshore workers is often desired and is always a consideration. Finally, a stable government, economy and a political environment are also key when considering what makes a country a good offshoring destination.
Want to Learn More?
Valenta Is a leading provider of outsourced personnel. We provide a variety of back office staff, including accountants, bookkeepers, financial staff, medical billing specialists, medical assistants, software administrators, IT staff, digital marketers, and much more. We also provide a wide range of software developers, big data specialists, data science roles, RPA developers plus automation and digital transformation specialists.
We operate service centers in India, Malaysia, the Philippines, and the Caribbean. We are planning new service centers within the next 12 to 18 months in Eastern Europe and Latin America. We are available to talk to you at any time about your staffing needs. We can support you for BPO and we can also support your software development requirements as well. Please reach out to your local Valenta managing partner to discuss these in greater detail.