Are you struggling with skyrocketing operational costs and wondering how to cut them without cutting back on profit?
Adopt two popular strategies that have worked for many in the last two decades: outsourcing and offshoring most of your operations to reduce overhead costs, internal resources, and production lifecycle by one-fifth.
While both methods involve leveraging external resources and expertise, they differ in their execution and implications. Do you want to know how? Read on.
Is Outsourcing Cheaper?
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How Does Offshoring Differ from Outsourcing?
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Outsourcing refers to hiring third-party agencies to handle specific business functions or processes.
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Unlike sourcing tasks to other agencies, Offshoring involves relocating business operations to another country.
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It allows you to access expert skills, advanced technologies, and cost-effective labor that may not be available internally, including IT services, customer support, human resources, manufacturing, and logistics.
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It benefits from lower labor costs, economic conditions, and varying time zones, usually third-world nations with minimal wages and high human capital, such as Nepal, India, and Vietnam,
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Did you know 59% of businesses outsource tasks to avoid the expenses related to hiring and maintaining full-time employees, such as salaries, benefits, and training?
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You can offshore basically any task to not only reduce costs but also run operations around the clock
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It helps businesses scale operations quickly without significant upfront investments in infrastructure and staff.
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A key benefit of Offshoring is labor cost savings. For example, hiring a software developer in the US costs around $110,000 annually, whereas employing a developer in South Asia can range from $20,000 to $30,000 annually.
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Is Outsourcing and Offshoring a Right Solution For You?
If you are an enterprise constantly looking to reduce costs and increase profits without cutting corners, outsourcing and offshoring may be your only solution.
Let us explain to you the merits of these two popular concepts.
1. Lower Overhead Cost and Higher Profit
Overhead expenses often occupy the most significant portion of any business’s operating cost; therefore, keeping it minimal and substantially increasing net revenue requires offshoring to optimal locations like Nepal, where the average pay is four or five times less.