Offshoring is when companies move parts of their work to other countries or outsource certain company functions to overseas partners. This form of business is becoming popular as it helps businesses grow, save money, and work more efficiently.
Even though it’s most common in industries like manufacturing, other areas like technology, customer service, and even the entertainment world are now using offshoring to gain an edge. One reason companies do this is to find talented people in other countries but also to save money as differences in exchange rates mean they can spend less on salaries.
For example, if a business in the U.S. hires workers in Mexico or India, they could save as much as 60% on what they usually pay for the same work. While this is one of the most common reasons for offshoring, it’s by far the only one. Offshoring can also be done for a variety of different reasons, including to avoid overly restrictive local regulations.
A prominent example of this is seen in the iGaming industry. With US law delegating the business of regulating online gambling to states, this has resulted in a patchwork of regulation— with most states having no legislation in place that allows for legal online casinos. As a result, many burgeoning overseas online casinos now cater to the US market to fill this void. By registering their sites via offshore companies, these platforms are able to exploit a legal gray area that makes them accessible to US players without breaking any laws.
According to journalist Krishi Chowdhary, these platforms often come with added perks like better bonuses, a wider array of games, and easier sign up processes that make them more attractive than traditional online casinos. However, players are cautioned to only play at such offshore sites if they have been professionally reviewed for safety and quality first to avoid scam sites.
For other companies that turn to offshoring, sometimes this becomes necessary because there aren’t enough skilled workers in one place. As a result, many businesses now tend to look elsewhere for help. For example, companies that need skilled workers who are really good with technology, app development, or software engineering, can source these skills from other regions.
In places like India or the Philippines, there are many experts who can do this kind of work for less money than local professionals charge for the same thing. This allows companies to use their skills while saving on costs. Cost saving also means a company can spend more money on improving its products, creating new ones, or even on advertising and expansion.
However, while looking to save money, it’s still important to ensure that offshore workers still have healthy working conditions. When this aspect isn’t catered to, it can result in backlash. A prominent example of this came earlier this year as The United Auto Workers union fought for improved conditions in Mexican plants.
Despite ongoing issues like these, one of the best aspects of offshoring is how flexible it can make a business. Imagine a company selling toys that only gets very busy around Christmas time but isn’t that busy the rest of the year. Offshoring allows that company to hire more workers during the busy season and reduce staff when things slow down—without having to build more offices or buy extra equipment.
Offshoring also helps companies work around the clock. If a company in the U.S. offshores its customer services to the Philippines, it can offer help 24 hours a day since the Philippines is in a different time zone. Perks like these help keep customers happy since someone is always available to help, even in the middle of the night. This method is especially useful for improving the efficiency of small businesses.
Another reason offshoring is smart for businesses is that it helps them reach new markets. When companies set up parts of their business in other countries, they get a better idea of what people in those countries want.
This is especially helpful for companies that want to sell their products globally. By being closer to customers in new places, they can quickly make changes to their products to fit local tastes. Also, when businesses offshore to other regions, particularly ones with booming tourist sectors, they are able to gain access to a more diverse range of customers and learn how to appeal to them more effectively.
Lastly, offshoring lets businesses focus on what they do best. Instead of worrying about every single task, companies can outsource some jobs, like IT support or human resources, to other countries where offshoring is cost-effective while keeping their attention focused on their main goals.
The massive boom in offshoring proves that this is no longer a practice that’s just for huge companies. Today, as a result of growing digitization that enables so many more remote-working opportunities, even smaller businesses are discovering that it can help them grow and save money. Regardless of whether it’s finding talented workers, saving money, or expanding into new markets, offshoring can be a key part of business success for companies worldwide.
