Emerald Technology Aug 12, 2022 1:22:58 PM 15 min read

Everything Your Company Needs to Know About Global Outsourcing

If you are considering outsourcing, there can be a lot of surprising ways in which that decision can impact your business. Whether it's the cost savings or the increased profits, outsourcing has numerous benefits for businesses all over the world.

With an increasing global population and demand for goods and services, companies are expanding internationally as trade increases and economies grow. This has led to a greater influx of companies looking to outsource work outside their country of origin.

Before we go through the benefits of global outsourcing and why every company should consider collaborating with a reliable global partner to do so, let's take a quick look at what we mean by "global outsourcing".

What is global outsourcing

The general definition of "outsourcing" is the process of a company hiring a third party to perform tasks, handle operations or provide specific services for it. Global outsourcing, on the other hand, is the same but involves offshore third parties. Hence why it is sometimes referred to as "offshoring".

So what does this mean for your business? Well, in today's globally competitive marketplace, being able to outsource work offshore can prove invaluable to your business. It can help you cut costs significantly while also saving you time and energy. But before we get deeper into things, let's talk about the main economic effects of global outsourcing.


Effects of global outsourcing on global economics

For quite some time, the concept of "global outsourcing" has been the subject of a lot of criticism and debate. Although much like most things, there are clearly some drawbacks to international outsourcing, there are also numerous benefits that are brought by the process, not only to the company in question but also to the economies that are involved in it.


Impact Of Global Outsourcing On The Local Economy

Unfortunately, outsourcing tends to be attached to a loss in local jobs. While it is definitely a legitimate concern, nowadays, outsourcing tends to be done to find more niche services – ones that aren't so easily found on a local level. This helps the local economy to thrive, as the funds and resources can be invested into different areas of the business, rather than just focusing on one particular service.

Moreover, global outsourcing allows businesses to become more efficient, which then allows them to gain competitiveness. The inability of a local business to become competitive in an increasingly competitive market will have greater economic impacts compared to the few jobs lost otherwise. Plus, if a company ends up folding, there will be a greater local economic impact due to the sudden exponential loss of jobs. And this is especially so if the company decides to pick up and move abroad.

Besides, a competitive business is more likely to attract investment. This can lead to a significant local economic benefit for not just the company itself but the local economy, too.


Impact Of Global Outsourcing On The Foreign Economy

Outsourcing is one of the things that has led to globalisation. It helps to expand and evolve economies, better enabling them to adapt to a changing world on a global scale.

While, in most cases, a globally outsourced workforce tends to be paid a significantly reduced wage compared to their Western counterparts, this point forgets the impacts that that same wage has on the individual being outsourced. While no one could realistically survive on a $1000 wage in a place like New York, for example, that same $1000 can stretch incredibly far in countries like Argentina, India, or the Philippines.

The added benefit of that influx of new money in the foreign economy can lead to significant growth in said economies as those being outsourced are able to afford more goods and services that they wouldn't have been able to otherwise. This then adds money into that foreign economy and helps with its economic cycle, leading to incremental growth opportunities.

And, to bring this point full circle, those growing foreign economies could then develop stronger business partnerships with more developed nations. This, in turn, would allow more business to be conducted between the two while allowing more goods and services to be exchanged – turning into further investments on both ends.


examples of global outsourcing

So, now that we understand what global outsourcing is and how it benefits the economies involved, let's go through some of the most common examples of global outsourcing to have an idea of the possibilities available.


1. Manufacturing

It's no surprise that manufacturing is probably the biggest source of global outsourcing. As most industries are focused on the production and distribution of goods, it's incredibly profitable for a company to outsource the production of these goods. Big names that outsource their manufacturing are Google, Apple and Sony.

We're all familiar with the "Made in China" label on most things that we own. Electronics, fashion, consumer packaged goods – these industries all tend to outsource their manufacturing duties overseas. While cheaper labour tends to be the top reason why manufacturing tends to be more attractive in other countries, the materials needed to produce a majority of consumer goods tend to be more affordable too.


2. Customer Service

Customer service is another big area of global outsourcing. While it's obviously important for a company to focus on customer service within their own borders, especially in the early days, global outsourcing allows companies to grow and expand their brands further by offering 24/7 customer service across email, live chat, social media and voice calls.

Thanks to developments in internet technology, contact centres are able to utilise cloud-based platforms in order to communicate with a company's customer base on a global scale. These technologies remove the need for local call centres to work overnight shifts or to work overtime just to meet customer service demands.



3. Marketing and Advertising

In an increasingly competitive global market, marketing is an area that all companies need to look at when out-manoeuvring their competitors. Things like advertising and marketing campaigns require vast amounts of research in order to find the best possible target audience for your product or brand. But, thanks to globalisation, these tasks can be delegated to dedicated marketing partners rather than spending resources on building and training an in-house team.

Thanks to the ever-growing expanse of the Internet, companies can communicate with one another near-instantaneously at a much more affordable rate than before. Businesses in the US could hire a reputable marketing agency in Estonia to manage their marketing efforts. Although regardless of whether a company has its own in-house team, outsourcing marketing initiatives could be both a cost-effective method of running campaigns as well as a great source of knowledge sharing.


4. Human Resources

As global outsourcing becomes more apparent with the above industries (and beyond!), it’s fair to say that there’s been a rise in the need for HR outsourcing services as companies look to benefit from globalisation. As the number of remote teams and “digital nomads” increases worldwide, companies tend to look to outsourcing their HR, payroll management, compliance and onboarding processes.

Not only do these outsourcing companies help with nearly everything under the “human resources” umbrella, they’re also well-versed in labour laws across many countries around the world. They can help companies hire, pay and manage their global workforce legally and compliantly.


benefits of global outsourcing for companies

As we've mentioned previously, global outsourcing is one of those scenarios that benefit both the company and the country involved. But what about the benefits on a more business-focused level? What benefits does global outsourcing bring to the companies that utilise it?


1. Save Costs

The average cost of outsourcing a job has dropped significantly over the years, relatively speaking, and this is one of the reasons why global outsourcing has gained so much ground. The larger a company, the larger its operational costs will be – which not only includes infrastructure and rent but the workforce too. Global outsourcing helps lower these expenses.

While working with an offshore team has numerous perks, one of the most notable is the increased output at a decreased cost. That can be more personnel, enhanced infrastructure, or even better talent. And, especially if the outsourced workforce works remotely, there isn't a need to invest in facilities or equipment. This means the company doesn't need to worry about maintaining the workforce that they have while also having more experts at its disposal.


2. Improve Productivity

If a company delegates the important yet repetitive tasks to a global outsourcing company, they free up a lot more resources to focus on the things they do best. For example, by outsourcing customer service calls, the company saves money on the infrastructure and equipment they would need to hire. Wouldn't you rather focus on your core business?

Overall efficiency is raised as a result of the cooperation between companies and their global outsourcing partners. Companies can take advantage of outsourcing to grow their business and focus on their core function. Global outsourcing has long-term positive effects on productivity and worker satisfaction.


3. Gain Access to a Larger Talent Pool

Global outsourcing offers much more than just outsourcing repetitive tasks; it also gives companies access to a much larger talent pool for a variety of skills. It allows companies to access a larger talent pool of workers, which helps reduce their time to find and hire the right person for the job.

Some companies are looking to bridge a skills gap in order to provide value, reduce costs, streamline operations, and increase productivity. There will always be the case where certain skillsets can't be found locally, and global outsourcing allows them to find these talents without the need to invest in training, visas and so on. By utilising a reliable global employment organisation, companies can gain immediate access to the skills they need.


4. Growth and Stability

Both global outsourcing companies and the companies that engage with them benefit from being able to grow their business. In an age of rapid growth, companies seek to utilise new opportunities to grow and expand. Global outsourcing can help by offering a wide range of services, as well as access to a wide range of qualified professionals.

Recruitment takes up valuable resources, which can be mitigated by engaging in global outsourcing. Despite their best efforts, some small businesses just don't have enough people on hand to handle all of the responsibilities associated with growing the business. By outsourcing some of those tasks, a company's output could increase, which in turn will lead to financial growth and the possibility of future employee expansion.


5. Knowledge Sharing and Innovation

Companies and their offshore workers can learn from each other, which benefits both customers and the company itself. The company gains access to the knowledge of other employees, which can make the product or service better and more appealing.

Since global outsourcing provides companies access to a wider range of employees from a wider range of backgrounds, an almost natural instance of knowledge sharing would occur as teams on both ends can share their experiences and brainstorm ideas that may never have been achievable otherwise.


Why every company should consider global outsourcing

Global outsourcing has become a key tactic for companies looking for growth and cost efficiencies. And it's not just about saving money on infrastructure. Offshore workers sometimes have access to much more advanced technologies than those giving them tasks, ensuring the automation of tasks to improve efficiency.

Global outsourcing is about long-term partnerships and dedication. While starting on a global outsourcing endeavour may be easy, engaging with a trustworthy global outsourcing partner will guarantee the best outcomes for your business. Only a verified offshore, global outsourcing partner will continue to strive to provide premier services for the years to come.