29 July, 2014

Why Offshore Outsourcing is the Next Big Industry Trend

Hand Drawn World Map on Greenboard with Different Time Zone Clocks

By B&T Magazine

Productivity shouldn’t be limited by geography says Salmat’s general manager, business development, Max Tennant.

When CR Digital’s General Manager Stuart Woods arrives at work in Sydney’s Crows Nest he turns on his computer and says good morning to two-thirds of his staff.

Woods is one of a growing number of Australian small businesses that has staff based in Manila. He talks to them constantly during the day via Skype. Woods says that in many respects it is better than having them sitting in another room as he has constant access to them.

CR Digital is not a big business but Woods has used staff in the Philippines to perform pivotal tasks in his business for almost six years. Woods was an early adopter of using more affordable staff offshore and using the savings to grow other divisions of his business.

Just like any other organisation, the teams talk and work together regularly via Skype, using cloud-based systems such as Dropbox. All new employees are formally trained and the senior staff regularly visit the Manila-based team.

CR Digital is just one of many Australian SMEs using resources overseas – something that is often regarded as accessible only to large businesses.

As reported in Salmat’s recently released report, Beyond Borders, nearly 80% of businesses using offshore resources had retained or increased their local staff, with the average increase in their domestic workforce of more than 200%.

Salmat-Beyond-Borders-infographic-study

In Australia and across the globe, offshore outsourcing of business processes and knowledge is on the rise, with Australia among the larger economies to see this growth. The Gartner Forecast Report, Business Process Outsourcing, Worldwide

Australia’s largest companies have taken advantage of a globalised workforce for many years, but it’s only recently the practice has really taken off with SMEs. An increasingly competitive business landscape, rising employment costs and flexible new business models from outsourcing providers have been the key drivers behind this change.

It may be surprising for some, but cost cutting is often not the main driver for offshoring. Almost two-thirds of the survey respondents said their primary objective was to expand their overall team. Others listed the ability to access specific knowledge and skills, extend their reach globally, or enable the ability to scale as new business comes in the door.

This research has also been supported by Deloitte’s recent predictions that it will be the measure of service rather than the cost savings that will be the focus for organisations using outsourcing over the next 12 months.

Outsourcing back office functions such as administration and finance support from places such as the Philippines enables Australian companies to put their time and resources into hiring more people in roles designed to grow the business, such as sales or marketing.

The first step to determine whether outsourcing may be right for your business is to better understand your business competencies. Getting the most value from outsourcing begins with an understanding of your competitive advantage, and then looking at work functions that could perform better and more cost-effectively. By delivering non-core competencies offshore, you can not only operate more efficiently, but be confident that these business processes are in expert hands.

The next step is choosing the right outsourcing partner. While it is critical to build a sound understanding of the specific functions the outsourcer will inherit, what makes the partnership successful is the team and processes the outsourcer will dedicate to your company. Is there a good cultural fit with your organisation? Can they demonstrate commitment to a strong relationship with clients, including trust, proactive communication and effective issues resolution?

While offshore outsourcing has traditionally been the domain of large multinational companies, size is no longer a barrier for Australian firms who want to drive competitive advantage.

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