Updated: Feb 26, 2021
Offshore Staffing vs Outsourcing
The origin story of Outsourcing
Outsourcing is defined as the strategic use of outside resources to perform activities usually handled by internal staff and resources. The term outsourcing was formally coined during the 1980s, where firms were becoming more globally competitive. During the 1990s organizations began to focus on cost-saving measures and explored outsourcing functions that were necessary to the business but are time-consuming and add little to no value in the core functions. It was during the 1990s when outsourcing was becoming increasingly popular. By this time, it also reached the Philippines, especially when the Philippine Congress passed the Special Economic Zone act and offered tax incentives to attract more foreign investors. Now the outsourcing industry contributes $26 Billion to the national GDP.
The origin story of Offshore Staffing
Offshoring is the relocation of business processes typically from one country to another. This business practice gained popularity in the 1960s where manufacturing jobs were moved from developed countries to developing countries. However, the growth of the internet birthed a new business process called remote staffing. The roots of remote staffing came from freelancers using marketplaces like CraigsList to advertise their services. By hiring remote staff regardless of their location, companies see the benefit in hiring remote staff from offshore destinations to save cost and diversify thus the term evolved to offshore remote staffing. However, due to the wide database and cluttered information on the internet, companies often have a hard time finding the perfect candidate online especially beyond borders. Here is where UpStaff Remote fills in the gap, we are a company specialized in providing offshore remote staff based in the Philippines that knows exactly the culture and talents of the country. We recruit, screen, and hire the best remote professionals to match and work exclusively with foreign companies and manage them on the ground.
Differences between Offshore Staffing and Outsourcing
Offshore staffing and outsourcing are often used interchangeably, however these are two distinct business processes. Outsourcing is when the company hires a 3rd party organization located either in your own or another country to deliver the work and perform for you by giving them the full control, for example, hiring an accounting firm to do all the accounting and tax matters of your company. Offshore staffing on the other hand is when you hire someone from another country to work offshore as part of your own team just like your regular onshore local staff. The differences can be highlighted in key areas of work and control.
In outsourcing, the employees will work for the outsourcing company. An employee can work with multiple brands or projects because what the outsourcing company provides and manages are outputs. Meanwhile, offshore staffing is when an employee works directly with the company. The offshore staff has direct contact with regular onshore employees meanwhile in outsourcing is usually between managers between the outsourcing company and the client company.
In outsourcing, the client does not have any jurisdiction over who is working on the project or project development. They will only see the final output. Workers report to the outsourcing company. Meanwhile, in offshore staffing, the client company has full control of the project or work of the offshore staff. The client has control over project development and the nature of the work. Here, the offshore staff reports directly to the client. UpStaff then will act as a human resource manager for the offshore staff handling HR tasks, staff monitoring, payroll and other local administrative tasks.
In conclusion, outsourcing is the best solution when companies do not have in-house talents or expertise in certain functionalities. Offshore staffing on the other hand is best suited for diversifying the work team, tapping on international knowledge, and complementing the client's core functions.
We now can understand the potential benefits of offshore staffing in a clearer light. However, we need to discuss the potential challenges of having an offshore staff, particularly in remote set up and what are the best practices to mitigate them.
Working with teams in different locations and time zones is very difficult and challenging. Besides the different time zones, different countries have holidays too. Holidays like the Chinese Lunar New Year might not be very important to employees from the west but are very important to the remote staffers who live in Asia. This will cause some challenges especially for finding the right time to meet and respecting the private lives of offshore remote staff. To mitigate these challenges, both firms must find a middle ground on what time they are available for conference calls. Make sure that the time is compatible for both parties. Create a protocol on scheduling meetings, like meetings need to be scheduled a week in advance and set proper timeframes of the meeting. This is so that the offshore remote staff can properly plan and plot it in their calendars.
There will always be cultural differences, especially when the work team is very diverse from one another. Even if Filipinos are well versed with western culture and can speak fluent English. There will be areas where miscommunication and misunderstanding can still happen. The best way to mitigate these challenges is by having clear and open communication. Managers and business owners should facilitate open communication between their local in-house staff and their offshore remote staff. They can also conduct culture sensitivity training between them to ensure a better understanding of one another and cultivating respect.
There will be instances where miscommunications will lead to mismanaged expectations. To overcome these challenges, communication must be well-documented. Things like the minutes of the meeting and instructions should be well-documented and circulated between staff. Also, work teams must actively make sure that no crucial information or instructions are omitted or lost in translation. Next is conducting a strategic alignment meeting, this is to make sure all staff are on the same track.
In summary, offshore staffing is vastly different from outsourcing. It is where business functions are done by an offshore staff that exclusively works for the company. This is beneficial if the company wants a cost-effective solution to tapping into global talent. However, there will always be challenges along the way, it is best to understand ahead of time what these challenges are and create a plan on overcoming them so that it guarantees smooth sailing for both local in-house and offshore staff.