Are you thinking of starting up a new venture, but with a low initial budget? Or maybe you’re pushing your business towards expansion but are limited by costs?
Well, the good news is we have a savvy outsourcing strategy that might just be the key to unlocking new doors for you, with or without a large capital fund.
Why offshore in the first place?
Offshoring has been around for decades and has been recognized by many industries as a significant role in business processes.
The obvious reason for adopting this business model is the undeniable low-cost solutions it brings you. Hiring a cost-effective development team with the same skills of an onshore expert- if not better-is a great way to get the best results with lower investments.
Keep in mind that businesses thrive on optimal efficiency of costs. Not only are you and your employees benefiting from it, but the low costs can be transferred to your customers by offering lower prices, making them happy too! And what better way to steal the competition and stiffen your position in the market than by locking in loyal, happy customers?
Another major reason why you might consider offshoring is to take full advantage of the global talent at your disposal. There is so much untapped potential across the globe which you might even find to be the key to your venture’s success.
Without big bucks, your capital is limited- but that shouldn’t be the end of the road for you. Especially for early stage startups, the most tedious part is not having the right resources or skill sets to deliver a product, and that is why offshoring is a savior when building up a business on a budget.
Is offshoring a risky business?
There is a great deal of gray area when it comes to offshoring.
Any business owner who has outsourced work to countries in different time zones can certainly say that the struggle of getting everyone under one clock is a big one. While offshoring has its evident benefits, let’s take a look into the challenges it may pose.
- The time-zone difference creates a gap in workflow and members of the same team may not be able to collaborate as frequently.
- It can be challenging to communicate the understanding of the products and what is expected when the only communication is via the internet.
- Syncing up goals and visions is much harder to do when the team is scattered.
- Not being a part of the organization structure can cause offshore teams to lack context and cooperation.
- Language barriers are always a fear because it may limit the offshore team’s understanding of business values and processes.
How does the Hybrid Model solve this?
Now that we’re all caught up on the idea of offshoring and can see its clear limitations, let’s explore the much-talked about phenomenon that is the “Hybrid Business Model”.
This is an onshore-offshore mix where both business models are put in place. You have an onshore team to understand and communicate the client’s requirements to the offshore team who then completes the tasks.
The onshore team acts as a connection between clients and offshore team to make sure the work flows smoothly. Having a dedicated team onshore can bridge the gaps of offshoring and keep the goals of the business aligned.
This smart business model helps you tackle any skill shortage and in turn, improves your innovation capabilities, while keeping the core business functions in close proximity. So when we look at product development, one might use a more skilled offshore team to deliver high quality products at a lower price, but have team members on-site to manage the clients face to face, or in real time. You get the best of both worlds and minimize the limits of a typical business model when using this outsourcing strategy.
A common misunderstanding- The Perfect Ratio
So when considering an onshore-offshore mix, what might be the optimal ratio for you?
Well, the truth is, there is no perfect formula to this mix. There is no simple answer to how much of the business you should outsource overseas, and how much you should keep on-site.
It might be easy to think of outsourcing most of the jobs without doing much heavy lifting onshore, but that’s where the problem comes in. Many organizations, especially startups, have this common misunderstanding that the best practice is to offshore all the work that would usually require more experience, and keep newbies onshore in order to create the utmost cost efficiency. But what they don’t realize is that keeping experienced and knowledgeable workforce in close proximity is crucial to keep the business alive.
The key deciding factors of the business should be left to the skilled and experienced if you want to make sure your business is being guided the right way. You should never rely on newbies to take the wheel just because it minimizes your costs, or you might end up driving right into a ditch.
The right onshore-offshore ratio for you depends entirely on your business and the way you want to run it. As long as you have a reliable team onshore that can contribute to key decisions, and guide the offshore team seamlessly, your balance will be spot-on. I personally encourage you to take advantage of the cost benefits of outsourcing, but don’t let that blind you from knowing what costs are actually necessary.
To conclude
All in all, the typical business models we see in industries today usually don’t live up to a business’s ideal practice. Balance is usually what impacts success to a great degree, and the balance of onshore and offshore is one you can start with.
Take it from us. We’ve been learning and perfecting this balance for many years now. ITC has helped several businesses across borders achieve the benefits of an onshore-offshore model effectively.To discuss your offshoring needs further with us, get in touch with our skilled team today.
