For decades now businesses have been offshoring employees. This is the process where a company hires either employees or contractors who live in overseas countries to handle various types of work. This is done because the companies are able to get the work done at a fraction of the cost that it would take to pay employees in the US.
The lower cost of living in countries like China, Singapore, the Philippians, and other places is significantly lower. In addition, the regulations that companies must comply with in the United States and other Western countries are far more burdensome.
Depending on the job being filled, a company can often hire three or more offshore employees for less than it would cost to hire one locally.
While there are definitely some major advantages to offshoring employees, a growing number of companies are finding that there are also some major problems.
In fact, a trend has formed where companies are actually starting to downsize their foreign offices in favor of hiring people in the United States. While it is unlikely that offshoring will go away entirely, companies do need to look at the benefits that bringing employees back locally can have.
Read through the following five benefits of either onshoring employees that were once hired overseas or avoiding any type of offshoring efforts to begin with.
Shrinking Cost Savings
Thanks in large part to the many years of offshoring, the wages that are being paid in countries around the world are going up. This is definitely a good thing for those working in poorer countries, and for the global economy.
As wages in an area continue to rise, however, it will quickly shrink the cost savings that a company gets from moving jobs overseas. For many companies, these savings have gotten so small that it no longer makes sense to keep jobs overseas.
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Better Customer Service
For many companies, this is the biggest reason why they want to bring jobs back onshore. Anytime someone has to interact with a customer or potential customer, you need to make sure that they can provide the best level of service possible.
While it is definitely impressive that so many people in poorer countries are fluently bi-lingual, their accents can make customer service a challenge. In addition, the cultural differences and idioms in various countries can make conversations awkward. This can be especially problematic in sales related jobs where keeping the potential customer comfortable is critical.
Some offshore employees have become incredibly proficient at customer service-related jobs, but it is much more difficult to teach to offshore teams than it is local teams. This is why the onshoring trend is largely being led by the customer service and support industry.
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Easier Training and Growth of Employees
When a company looks at the leaders within their organization, they will find that they almost always came up through the ranks of the company. It is natural for entry level employees to work hard and get promoted up through the ranks of the organization.
When a company has their entry level employees overseas, it cuts out this natural growth path, which can make it very difficult to plan for the future of the organization.
Cyber Security Benefits
When you have employees working remotely from countries around the world, there are going to be some significant security threats that you need to watch for. Most offshoring is done by hiring a third-party company to manage your business needs overseas.
This introduces a potential vulnerability point. In addition, you need to have Internet connectivity to these locations, and they need to have computer systems in place. Each of these things is a potential place where exploitation could occur.
While all companies need to take cyber security seriously whether it is for local employees or offshore, it is more difficult and costly when you have remote workers. The added expenses and risks associated with offshore workers can quickly reduce any cost savings that they were creating.
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Fostering a Team Environment
During the global pandemic millions of people began working from home. While there are absolutely some major benefits to having employees be able to work from home, companies also found that there are some big obstacles as well.
When your team is not able to interact on a daily basis, they are not going to get to know each other nearly as well. This means they will be less likely to bounce ideas off of each other, or even point out flaws in a system.
It is definitely possible to successfully run a team of people who are not physically in the same room every day. It is, however, much more difficult. This is why as companies move forward from the pandemic, they are often either requiring that their teams come back to the office full time, or at least begin a hybrid schedule where the team is together a couple days per week.
This is not practical with offshore employees, which puts that type of work at a big disadvantage.
Is Onshoring Right for You?
When looking back over the past several decades, it is almost undisputable that the trend to outsource work went to far and began causing problems. Today, the growing focus on bringing employees back to the United States is a correction to that overreach that occurred.
Rather than just jumping on board with every business trend, however, each company should analyze every role they have and decide if it can be best filled locally or if offshoring really makes sense.
There is nothing inherently wrong with offshoring certain positions, and there is definitely nothing wrong with bringing some positions back to a local office. The important thing is to take the time to figure out what is right for your business, your employees, and your community.
When done properly, you can fill all your positions with the right people at the right locations, which will help to make your company a success.
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