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What advantages does global outsourcing offer?

Local versus global outsourcing Do they genuinely differ from one another? It really depends. The question lacks a simple "yes" or "no" response. The phrase "outsourcing" describes a commercial practice in which an organization hires a third party to perform tasks, oversee operations, or provides services on the company's behalf. This may suggest that you may hire a business locally or a third party across the nation to manage a project, a department inside your organization, or a team. Global outsourcing, often known as off shoring, is the process of assigning work to a company with an international headquarters.

This article will go over the primary reasons why companies outsource to other countries as well as the advantages and disadvantages of doing so.


The global business process outsourcing (BPO) market was estimated to be worth $245.91 billion in 2021 and is expected to increase at a compound annual growth rate (CAGR) of 8.5% to reach $435.89 billion by 2028.

It is hardly shocking that cost savings account for 70% of CEOs' reasons for outsourcing. According to the Deloitte 2020 Global Outsourcing Survey, "the decision to outsource globally is driven by cost reduction." If there is no positive cost case, it will not occur. Cost is a constant concern. It's possible that many smaller businesses lack the operating requirements or resources necessary to hire staff members or contract out labour locally.

Another thing that makes offshore or global outsourcing to a lower-cost economy so enticing is flexibility, which is listed by 40% of CEOs as the top benefit. According to a Clutch study, 24% of small businesses seek out foreign outsourcing services in addition to lower costs to boost employee productivity, while another 18% use it for expert guidance.

The pandemic's consequences in recent years have led to the rapid development of the digital transformation trend. As a result, increased capacity and stronger cybersecurity protections are now needed to keep up with Industry 4.0 advancements. In fact, 83% of leading IT companies are thinking about working with foreign outsourcing services to address any possible digital risks that can accompany this unexpected shift.

A global talent scarcity is an additional issue impacting companies across all sectors. The failure of 69% of organisations to locate and retain qualified employees results in an estimated $8.5 trillion in yearly profits going unmet. Therefore, rather than concentrating only on the local market, businesses can invest in global outsourcing techniques to have access to a high-quality, global talent pool.


Now that you understand the rationale behind corporate outsourcing to foreign nations, let's discuss some of the key benefits of collaborating with offshore and business process outsourcing (BPO) firms.


One of the biggest obstacles to a company's capacity to grow is its inability to invest in additional resources in order to meet growth targets. Businesses usually lack the time to hire a new employee in order to take advantage of potential growth chances. Some foreign outsourcing companies can get your outsourced team up and operating in as little as six to eight weeks. You can raise funds in this way that you can use to reinvest in the growth of your business. With the additional support of a global outsourced workforce, your business can take on more work.


You can assign tedious and time-consuming tasks to someone overseas instead of your own employees by using global outsourcing. Your international team will be appreciative of the opportunity to help your company in this way, allowing your local team to focus on what they do best and what motivates them.

Outsourcing can also boost customer satisfaction by improving the calibre of your client interactions, making yourself more accessible to them, and providing them with access to expert services whenever it's convenient for them. Companies can even set up a 24-hour customer service line so that your outsourced team can expertly handle customer service issues while your in-house personnel focuses on developing relationships.


Global outsourcing can save your company money by having typical tasks completed in a nation with lower labour costs, such as the Philippines, where employment costs can be as low as 70% less. Hiring new staff comes at a financial expense. Hiring a new offshore staff entails significant overhead costs. These days, there are many different global outsourcing models to select from, but it's always important to select the one that suits your needs.

A popular form of outsourcing is known as "managed operations," in which hiring, HR, new office equipment, superannuation, payroll tax, workers' compensation, IT, and managerial oversight are all handled by a third-party supplier. Aside from the engagement costs, all you would have to give up would be time—a long-term investment for your business—in order to train new overseas workers in this manner.


All parties involved—from CEOs and local staff to customers and your offshore crew—can benefit from global outsourcing.

As businesses expand and scale, it can help them become more adaptable and efficient, freeing up capital for many to reinvest in other areas of the company.


If you outsource one administrative task, your local team will have more time to work on other, more advanced tasks. Examples of this include building relationships with customers and starting planning for projects that have been postponed by several months due to administrative overload. A cascading "efficiency impact" results from this, enabling more onshore work that is less time-consuming and more geared towards business expansion.

Before selecting an overseas provider, a crucial query that many companies have is, "Is outsourcing ethical? " The quick answer is definitely yes. You provide people in other countries with employment opportunities and competitively paid jobs. Consider the Philippines as an example. The outsourcing industry in the Philippines, which employs over 1.2 million people and ranks among the biggest employers in the country, has significantly boosted the local economy. Although Filipino workers in the outsourcing sector receive competitive rates, their income is on the lower end of the pay spectrum.

But industry workers often make more than twice as much as the average American worker, and they also often get the benefit of being a part of a health maintenance organisation (HMO). Employers who regularly use an external workforce must abide by national labour laws, which are strictly enforced and safeguard private workers' rights.

Choosing the appropriate outsourcing provider is essential for success.

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