Best Offshoring Practices to Follow in 2023
Offshoring is a common practice for companies to move a part of their operations to another country through a third-party organization such as Cortex Consultants. There can be numerous reasons behind such a move. A few of the common ones include:
- Cutting labor costs
- Establishing a presence in another country where a large chunk of the company’s market exists.
- Tapping into high-quality & abundant talent at the offshore market
Offshoring a part or whole of operations is a company’s strategic decision to meet its business goals and build a better brand perception. Thus, it is necessary that such a step is taken while ensuring that the move truly benefits the company and the customers it serves. Below are some of the best practices companies can follow for successful results. So let’s jump right into it.
Top 6 Proven Offshoring Practices to Get Offshoring Right
1. Analyse and Determine Processes that Need Offshoring
A clear vision and intent behind any strategic move is necessary. Offshoring is also a strategic decision, and one must have a clear intent behind the same.
Is it to cut labor costs?
Is it to access better infrastructure?
Is it to make your operations more time-efficient?
Is it for better customer reach?
Is it to get access to the offshore talent market?
The answer can be any of these, all these, or more. But clarity is a must. Once you know the intent, run a thorough analysis of all the operations that can serve the said intent. This will help you determine which operations must be offshored and where.
2. Choosing a Service Model
In the previous section, we mentioned choosing a suitable service model. Broadly there are two models organizations can opt from.
- Captive Model: You setup your own team of offshore employees. Companies prefer this if the operations involve handling sensitive data or having a presence in another country under their brand identity.
- Outsourcing Model: Here, companies subcontract their operations to other companies and choose services that best suit their needs. Organizations choose this if they do not want to avoid maintaining full-time employees for specific roles.
- VDC Model (Virtual Development Center): Virtual Development Center model enables you to set up an offshore team with the most skilled personnel apt for the job. Based on your requirements, the VDC model helps you access the country’s talent and set up operations offshore in a hassle-free manner without any legal formalities. One such organization is Cortex Consultants, which offers a flexible model, whether the company’s requirement is of 2 resources or 25.
While these are a few service models, companies can choose a hybrid package that is a combination of different models. One of the key aspects of offshoring is also to get access to incredible talent.
3. Partner with Reliable Organizations
Offshoring requires firms to have dependable partners because a great deal of the success or failure of the move relies on the partnerships you build. They facilitate the operations, put a system in place, and set up workflows tailored to the organization’s needs. Thus, choosing a reliable company to collaborate with is essential to get good results.
Let us understand how you can choose a dependable company and build a good partnership.
- Know about their experience, industry presence, and the kind of organizations they have worked with.
- Learn about their current and previous clients. If possible, do a background check and discover why previous clients discontinued their services.
- Have a conversation with them and gain insights into how they function and the kind of workflows they have facilitated.
All this information and data can be collated over time. So, follow the procedure for different firms and third-party organizations, and only once you’re assured, go ahead. Overall, all the insights must indicate two simple things – reliability and efficiency.
4. Establish an Effective Framework
Before you start offshoring the operations, create a healthy partnership framework. The firm running your offshore operations must have an equal investment in this process. Setting a framework is a one-time task that can be improved iteratively. It can be used to select and assign the roles and teams that will work offshore, choose a service model that meets your requirements, and define distinct responsibilities for both sides. This creates a seamless workflow, and everyone involved abides by the process.
Another important thing is that one must establish proper communication channels. When it comes to offshoring, communication is one of the most significant barriers. Thus, a healthy channel that works for both parties is imperative.
5. Set Onboarding Programs for the Offshoring Partners
Usually, third-party organizations and companies must have onboarding programs to help both parties conduct operations smoothly. In the previous section, we mentioned creating a framework. These programs can be considered a subset of the overall framework. For example, it helps when a new employee joins either party or when a new set of operations must be offshored. With such programs, the hassle of scaling up or scaling down can always be avoided.
Additionally, curating a training program for employees of both parties goes a long way. As a result, new people understand the company, the offshoring process, and the overall infrastructure in a streamlined and efficient manner.
6. Create Metrics to Determine the Success/Failure of Offshoring
The final step is to set up a system that measures the success/failure of offshoring operations. These can be regular audits wherein specific metrics must be determined to understand if the offshoring move delivers the results the company looks to accomplish.
The audits must measure the value derived from offshoring their operations and how the different processes impact the business goals. More importantly, the regular checks must also help both parties understand the challenges they face, how they affect the operations, and take measures to solve or mitigate them. Companies must also calculate the investment-to-return ratio and find out how progress can be made.
Overall, these are the 6 most effective and functional practices companies can follow to ensure their offshoring operations are fruitful and lend to a better business. The best way to ensure such success is to be clear on intent, choose the right partners, establish a clear framework to run operations and gauge their value.