Did you know that according to projections, global Business Process Outsourcing (BPO) will grow to around $435 billion by 2028? This came after the industry was valued at over $251 billion in 2022.
Why this tremendous growth rate? Statistics explain that approximately 84% of executives choose outsourcing as the best way to reduce production costs. India, The Philippines, Poland, Ukraine, Brazil, Mexico, and Argentina are among the most sought-after outsourcing countries worldwide.
These are why today’s organizations and businesses keep turning to global outsourcing. This post also addresses the perceived disadvantages of global outsourcing. So, keep reading.
The Benefits of Global Outsourcing
Engaging with BPO providers comes with some key benefits, such as the ones highlighted below;
- Cost Reduction
The best outsourcing countries, such as India and the Philippines, featured average monthly wages equivalent to approximately $424 and $885, respectively, in 2021. The employment costs in the Philippines, a lower-cost economy, are up to 70 percent less.
In contrast, the average gross monthly wage per permanent employee in the United States of America was over $6000 in 2021. This means that it would cost a company in the U.S. more money to hire an internal team than have these tasks completed in either of the above two economies.
- Business Growth and Scalability
The best way for your business to grow is to ensure you can free up funds and direct them toward investing in extra resources. Sometimes your business might face challenges recruiting a new team to use the current potential growth opportunities to maximum advantage. That’s where global outsourcing comes in.
Globally outsourced teams are known to offer extra support. This way, organizations are in better positions to increase their capacities to take on more work. This, in turn, boosts production significantly, thus meeting the demands of their target market.
- Increased efficiency and Job Satisfaction
Global outsourcing helps boost productivity across the board. How? While an offshore worker handles your company’s repetitive and time-consuming tasks, your in-house employees pay more attention to what motivates them and what they do best.
In the long run, leveraging global outsourcing opportunities helps improve efficiencies, quality, and staff satisfaction.
The Perceived Downsides of Global Outsourcing
Care is of utmost importance when choosing the right outsourcing provider for your business to avoid the following limiting factors;
- Social and Cultural Problems
Undoubtedly, the social and cultural customs in the United States of America differ from those in Poland, The Philippines, or India. Therefore, global outsourcing may come with some misunderstandings in KPIs, deadlines, or other areas of concern.
- Language Barriers
Language can prevent your business from reaping the global outsourcing benefits. Many global outsourcing providers operate in low-cost economies, which can easily affect the outsourced team’s English language proficiency. This is particularly the case for countries where English is not the first language.
- Data Security
Suppose your offshoring provider needs proper cybersecurity protocols and management plans. In that case, this situation can significantly increase potential data security threats.
U.S. Businesses Working with Nearshore Software Development Companies: The Benefits
Why risk facing the above challenges of global outsourcing when you can leverage the following key benefits of working with nearshore software development firms?
- Shared time zone
- Reduced costs
- New value levels
- Less language and cultural barriers
- Potential tax savings
- No hidden costs
- Protected intellectual property
Undoubtedly, businesses, companies, and organizations nowadays have multiple options for outsourcing services or whole departments. Suppose you have a business in the U.S. In that case, you can outsource to a domestic firm based in the same country (onshore outsourcing), a neighboring country (nearshore outsourcing), or overseas (offshore outsourcing). Each of these models has its pros and cons.