Offshoring involves setting up a physical presence in another country. The main motivation to use offshore staffing solutions is to reduce the cost of doing business by capitalising on real budget reduction advantages particularly in the hire of labour and other high cost items such as power, internet connectivity, and rent. Costs are usually much lower in the host country than the country of origin, in fact, the expectation of most companies that move part of their operation offshore is to realise at least a saving of up to 70%.

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Benefits

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The assignment or delegation of services to offshore staffing services, which are themselves separate entities, means that they are responsible for their own cost of operations as well as being competitive service providers. There are some governments, and Vietnam is very active in this regard, that grant special exemptions and incentives to companies that invest in their economy. Offshore staffing services in Vietnam such as Remote Resources in Ho Chi Minh City have their own recruitment service to source the best talent in the country for their clients so HR service costs are minimised too.

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Cost-effective

By using remote staffing solutions for select business processes, companies can improve productivity because they can focus their resources on core functions. The cost savings made from offshoring can be redirected to fund new initiatives and projects, for example, savings could be used to improve business infrastructure or increase marketing and promotional activities, resulting in the generation of more revenue.

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Challenges

  • One of the biggest criticisms levelled at companies that offshore part of their operation is that it creates unemployment in their local economy. But in return, it can be argued that by offshoring they are able to improve profitability by lowering costs and increasing revenue. The increase in profits can then be used to improve facilities and programs for the principal company and eventually lead to increased employment at home.
  • Another challenge often stated is that the client will be immersed in the culture and social practices of the host country. This may have an effect on productivity and communication. This can be the case in some popular offshoring centres but this is not generally found in Vietnam. In the case of Remote Resources, in particular, this is definitely not the case, as it is run and mentored by Australians. Once you walk in the front door you may as well be in Sydney or Melbourne.
  • Time zone differentials may work against the offshoring company because production could end up being delayed due to changes in manpower availability from time-to-time, but with more flexible attitudes to working hours this can easily be overcome.
  • Security issues may also be of concern, but the reputation of professional outsourcing companies at risk, security is given the utmost importance.
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The decision on whether you should offshore depends on the size and complexity of your operation and the scope of work. But looking at the massive expansion of companies that are looking for professional staffing solutions, offshoring will be one of the most compelling strategies for business development for many years to come.