First of all, what’s the difference between offshoring and outsourcing?
Though sometimes mistakenly used interchangeably, the terms offshoring and outsourcing are not mutually exclusive; that is, these activities can exist together. But, they can also be independent of each other.
Outsourcing involves contracting work to a third party, such as an outsourcing provider. Offshoring means doing the work in another country. Tasks can be outsourced irrespective of location. And offshoring work can be done internally or through a third party.
Firms like BPO Connect, do a combination of offshore outsourcing with the caveat of having onshore staff for quality reviews and account management.
The Changing Perception
As offshoring becomes more commonplace among companies with < $5million turnover and the market becomes more enlightened, the perception of what it means to offshore also evolves.
Technology, for one, has greatly enabled a faster uptake of offshoring through cloud and near-cloud experiences. Then, globalisation has increased competitive pressures for businesses to grow while keeping costs down. Throw in economic development in Asia, particularly countries like Sri Lanka, and you have greater access to global talent and skills.
The marketplace, particularly in accounting, legal and IT industries, is attune to additional benefits of offshoring, focusing on how incorporating offshoring can enable greater flexibility and effectiveness in operations.
According to a 2010 CPA Australian survey, 11.7 percent of 227 CPA Australian members surveyed said their employer currently outsources a portion of their finance and accounting.
What Offshoring Will Look Like in the Future?
We’ve already seen global economies remove barriers to trade, investment and labour through free trade agreements and the Trans-Pacific Partnership. This is only a glimpse of more to come as the labour marketplace has enabled companies to compete on a global scale.
Globalisation encourages businesses to relocate abroad and outsource specific processes, especially when technology makes it easier than ever to connect and communicate remotely.
According to a 2014 Deloitte global outsourcing survey, “Over 50% of organisations have indicated that developments in enterprise mobility, big data, hosted virtual desktop, business process as a service, and cloud computing will increase outsourcing.”
Our notion of offshoring will continue to change. As an industry, we’re moving away from the term ‘offshoring’ to fit into this idea of the global labour market. As businesses grant more freedom to employees to work remotely, there is less emphasis on where the job is getting done.
And as the markets of popular offshoring destinations in Asia become more mature, the pool of talent increases and higher value-add work can be outsourced to skilled employees. This helps developed economies overcome skills shortages.
In the future, we should continue to see technology, automation and a larger talent pool disrupt the global market and businesses move toward offshoring specialist processes.