Building an Effective Offshoring Strategy: The Ultimate Step-By-Step Guide

Offshoring has become a tremendous catalyst for business growth. It has resulted in significant success for global companies such as Google, Amazon, American Express, Canva, Telstra, and UnitedHealth Group whose expansion strategy involves outsourcing business processes and roles to the Philippines. 

With offshore outsourcing solutions, your company can experience numerous benefits, such as reducing costs, maximizing financial incentives, expanding to 24/7 business operations, scaling up team capacity and capability, gaining access to a global talent pool, and reaching new overseas markets.  

While successful offshoring sounds easy, it requires a solid strategic framework to ensure successful execution that creates value for the business. Before reaping its benefits, you must develop an effective and transformative outsourcing strategy to seamlessly integrate your dedicated remote team with your onshore team, and create a system that improves your overall operational efficiency.

 Let us dig deeper into a fool-proof guide to building an effective offshoring strategy.

1. Assess Business Processes by Value

The initial and most crucial step in offshoring is identifying which parts of the business you should offshore. This step involves an intensive assessment of your business processes and sub-processes. Here are two main questions that can guide you during your assessment: 

• Question 1: How crucial is this process in creating value for the business?

The answer may differ for each business or industry. For example, executive leaders may rate product development higher than customer service in the consumer goods industry but may be completely opposite in the hotel industry. 

• Question 2: How much value does each process add to the customers’ experience?

During the assessment, you can implement a scoring system to reflect the business criticality of each process. This value hierarchy will help your team identify which processes can be prioritized to be be moved offshore.

2. Identify Challenges

Though offshoring offers multiple benefits, it may also involve some operational and structural challenges.

• Operational challenges – There could be growing pains on the operations side during the transition and initial stages of your offshoring journey. Your offshoring partner should be able to collaborate with you and provide expert advice on overcoming these risks. Here are some steps that you can cover with your offshoring partner in order to mitigate operational challenges:
  • Identify and assess operational risks
  • Streamline the process
  • Implement the best metrics for success
  • Anticipate and manage risk by planning
  • Continuous monitoring and evaluation of risks
• Structural challenges – Structural risks stem from a problematic partnership with the offshoring provider. These challenges usually arise when expectations set by both parties are not met or delivered. An offshoring provider cutting corners or not delivering the quality they promised is an example of structural risk. 

To prevent these, you can:

• Do a thorough research and vetting of the offshoring provider during your selection process. 
• Monitor the performance of your provider and conduct business reviews, ensuring that they deliver what has been agreed in your contract or service level agreement. 

Generally, operational and structural risks come from Technology (hardware, software), People (employees, customers), and regulatory and compliance demands. By following the above tips, you can mitigate these possible risks. 

3. Choose a Suitable Offshore Model

Offshore models can help your businesses decide on the structural objectives and the support you need. There are four main offshoring models that you can consider:

• Freelance – This business strategy involves outsourcing the job to freelancers. Freelancing is widely known because of its flexibility and cost-effectiveness. However, there are potential drawbacks that come with it, too, such as an unstable internet connection, time zone differences, reduced productivity, language barrier, disjointed team collaboration, and quality control.  
• Functional – In a functional outsourcing setup, you are in a contract with a third-party provider to handle specific operations or functions of your business. Your provider is tasked to deliver the services, output, and quality level that are outlined in your agreement. However, your control in this approach is limited. You have no control over the third-party provider’s team that is tasked to execute your outsourced functions. You also have limited control of the process they are implementing during the execution. 
• Dedicated – This is an offshoring model where you can create your own team that will report directly to you. In this model, your offshore outsourcing provider closely collaborates with you to understand your talent needs and business requirements. You have control over the process of hiring, setting up, and scaling your dedicated remote team to ensure that your offshore team members meet the skills and experience requirements of your roles. Closely collaborating on the recruitment process ensures that your remote team members are a good culture fit for your company. Aside from having more control over the hiring process, this offshore model also gives you control over the processes that your dedicated team will execute, as well as the cost of running your remote team. Dedicated offshore outsourcing provides comprehensive solutions that include setting up the office and infrastructure, as well as the IT, HR, and payroll services for your offshore team, allowing you to focus on achieving your business targets.

4. Pick the Right Offshoring Location

The Philippines is one of the best Business Process Outsourcing destinations in the world. It is one of the best innovators in offshore outsourcing and offers several benefits to global businesses:

• Labor Cost-effectiveness – Outsourcing in the Philippines is more economical. You can save up to 70% on the salary cost alone, which is considerably lower than Western countries. This can be attributed to the lower cost of living in the archipelago. 
• Fluent English Speakers – The Philippines is the third-largest English-speaking country worldwide, with approximately 60 million English speakers. English is one of the official languages in the country, making Filipino talent fluent and comfortable in speaking in English. 
• Close Affinity to Western Culture – The Philippines was colonized by Western countries for more than 300 years, which is why the country’s culture is closely intertwined with the West. As a result, most businesses in the Philippines are closely patterned to the West. For example, the finance & accounting practices and procedures in the Philippines follow US standards. If you’re a US company that plans to offshore finance and accounting, considering the Philippines as the best option. 
• Highly Skilled Talent – Outsourcing in the Philippines will give you access to a wide pool of qualified, highly experienced professionals. Whether you need an Accountant, IT Expert, Graphics Designer, or Digital Marketing Team, there is almost no limit to the type of talent you can hire.
• Strong Work Ethic – Filipinos are innately diligent, loyal, and hardworking. They are dedicated no matter what their roles are, making them reliable on every task that fits the BPO industry. 

5. Build Offshore Teams for Various Business Functions

Another strategy is to diversify your offshore teams. Here are some suggestions on how you can do this. 

• Partner with a provider who can build you your ultimate remote team – Having the best team members allows consistency in service output and ensures excellent customer communication. Instead of outsourcing on a project basis, it is best to build a dedicated team to provide a more consistent and high-quality customer experience.
• Let your offshore team handle your extended operational hours – With the lower cost of offshore labor, you can scale your operations and increase service capacity. For example, you can extend your customer service operations to offer 24/7 support by having your own dedicated remote team of customer service representatives from the Philippines. If you’re an IT company, you can keep up with high demands for technology-based services to increase your competitiveness. 
• Specialize in niche services by expanding your team’s capabilities with offshoring – With offshoring, you can access talent that may be challenging to source locally. You can hire experts in highly specialized fields in IT and Software Development, Digital Marketing, Content Development & Design, and other functions. This allows you to offer niche services, increasing your competitiveness. 

Overall, diversifying your offshore teams will increase your competitive advantage, allow you to adjust to changing market demands, and ensure a positive customer experience.

6. Get to Know Your Offshore Team

Offshoring involves the combination of different cultures, economic beliefs, and distinct mindsets. Thus, exerting effort to know your offshore team can help you be more familiar with each other’s cultural differences, build a harmonious relationship with the team, instill trust, have better communication, and increase positive collaboration. Here’s what you can do to know your offshore team better.

• Do regular visits to your offshore team’s location – While working remotely works, it is also important to do in-person check-ins with your team to foster working relationships and get to know them better. Make these visits worthwhile by having a solid agenda and goals for your in-person team meetings. 
• Set up weekly online meetings – You can conduct weekly online meetings to monitor progress and provide immediate feedback on your offshore team’s performance. You can also use this time to understand their challenges, so you can find ways to improve collaboration and further increase their productivity.

• Use messaging apps for faster communication – You can use different messaging apps such as Microsoft Teams, Slack, Hangouts, and Proofhub to allow a faster communication exchange with your team. 
• Have a team directory – Maintain a directory that includes your staff’s name, role position, contact information, and location to familiarize and contact them easily.
• Conduct teambuilding or happy hour activities – Plan virtual games, trivia quizzes, or, if possible, a teambuilding activity for your offshore teams to further engage and motivate them. Your offshoring partner should be able to organize these activities on your behalf and help you customize the employee engagement events to align them with your onshore engagement initiatives.
• Always ask for and provide feedback – Getting and providing feedback is critical in ensuring employee success, whether the talent is deployed onshore or offshore. Your offshoring partner should be able to have processes in place to facilitate regular performance evaluations and feedback sessions for you and your remote team. These sessions will provide you valuable insights into your team’s performance, challenges, engagement, and what you can do to further improve their employee experience and productivity. 
• Respect and recognize cultural diversity – Always consider that your team, both onshore and offshore, is a mix of different cultures and traditions. Ensure that holidays, beliefs, and customs are publicly well-known and respected. This promotes respect for your team’s individuality and helps you and your offshoring partner create employee activities that are more inclusive. 

7. Review Your Contract

A well-written agreement/contract clarifies and sets proper expectations for both parties involved. It protects both parties by outlining terms and agreements and avoids disputes and legal concerns. It also holds accountability in fulfilling obligations and commitments. The contract will also provide the framework to measure success. 

• The contract with your offshoring partner should clearly identify the parties involved, as well as the role, scope of responsibilities, services, duration of services, pricing, as well as service liability of each party.
• Consult with your legal team to finalize and ensure that the contract is within your legal rights.  
• Review the contract thoroughly to ensure it is comprehensive and accurate. Make sure you openly discuss items with your offshoring partner if you have any questions.

A detailed partnership contract is crucial because it provides clarity, protection, accountability, trust, and flexibility. It helps you establish a strong foundation for collaboration, build confidence, and reduce the risk of disagreements. 

8. Onboard Your Offshore Team the Right Way

Onboarding your offshore team is crucial to your success. Your offshoring partner should collaborate closely with you to ensure that your remote team is given the proper orientation, tools, and training to seamlessly work with you and your local team. 

Your offshoring partner will develop a detailed plan that outlines the step-by-step process of ensuring that your offshore team has the tools, infrastructures, and systems they need before handing them over to you.

Your offshoring partner should develop a detailed plan that outlines the pre-employment requirements, software and hardware, and onboarding training that needs to be completed and delivered for your team members before formally handing them over to you on their first day.

A successful onboarding sets up your remote team for success, as well as minimize operational disruptions and avoid negative impacts on your team’s productivity. 

9. Evaluate and Enhance

Identify areas for improvement and implement necessary adjustments to your current strategy to ensure offshoring success. Here are some steps for you to follow:

• Do regular evaluations of your offshoring strategy – Review your existing partnership with your offshoring provider to identify areas for improvement and opportunities to grow your business. Your evaluations should also help you identify cost-saving opportunities, optimize operational efficiency, improve your team’s quality, reduce risks, and enhance the customer experience.
• Create an Improvement Plan – Create a plan based on the areas for improvement. You may include developing new processes, hiring for new roles, and acquiring new and improved tools or technologies.
• Implement the Improvement Plan – You can redefine roles and responsibilities, expand your team by offshoring more functions, update policies and procedures, provide training, or invest in new tools or technology.
• Regularly monitor the performance of your remote team and that of your offshoring partner – Monitor the performance of offshoring strategy to evaluate its effectiveness. You can track key performance indicators such as cost savings, quality, productivity, customer satisfaction, and employee engagement.
• Focus on Continuous Improvement – Evaluating and enhancing your offshoring strategy helps you ensure that the strategy contributes to the business’s overall success. It is essential for companies who want to sustain competitiveness and achieve their business goals. It helps to improve performance, increase efficiency, mitigate risks, and enhance employee engagement. Companies can optimize their operations and achieve long-term success by regularly evaluating and enhancing their offshoring strategy.

Start Your Offshoring Journey Today 

Building an effective offshore strategy is way easier if you have a trusted offshoring outsourcing company. You don’t need to create it from scratch and spend months or years to finally implement it. With the right offshoring partner, you can always begin today.

Satellite Office has a proven track record of assisting businesses to leverage the benefits of outsourcing by building them a dedicated, highly skilled, and cost-efficient offshore team in the Philippines. 

Our tailored offshore outsourcing solutions give businesses full control of their remote team’s productivity, output quality, and targets, while we provide comprehensive support that makes managing offshore employees as simple as possible. Experience a full-service model, including premium facilities, HR, IT infrastructure, account management, and payroll support services, with no hidden fees.

Looking for an offshore support service partner? Get a free assessment now, and let’s see how we can help.

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