OFFSHORE/ONSHORE OUTSOURCING: SOME DEFINITIONS FIRST
Offshore outsourcing literally means outsourcing your activity to a company not on your shore or who is beyond your shore. With the offshore outsourcing business model, the buyer of the service is located in some other country than the provider of the service.
Onshore outsourcing (also called domestic outsourcing), on the other hand, uses an external but local company for products, services, operations, and support.
A CHANGLING LANDSCAPE
Outsourcing in the early days was primarily driven by cost savings. U.S. companies were saving significantly by offshoring business operations and projects in the 1990s. But a steadily rising standard of living overseas has put a dent in the wage differential between the U.S. and these traditional offshore regions. So, cost is becoming less of a factor.
In a recent study by the consulting and research firm Everest Group, North America onshore outsourcing has surpassed offshore outsourcing from 45% in 2014 to 52% for the period of 2015 and 2016.
This notable shift in the outsourcing landscape can be partly explained by business drivers impacting cost, quality, and delivery, such as the following:
A LONG TRACK RECORD
Over the course of 25 years as a trusted U.S. service provider to industry leaders, Aesbus has garnered continuous recognition for innovation, high-quality work, and reliability. Our service portfolio reflects and adapts to the latest technologies for content creation and management across different delivery platform--from print to multimedia and web.
We’ve weathered the challenges of relentless and bruising competition from offshore outsourcing firms and continue to successfully establish long-term business relationships with our clients.
HIDDEN COSTS IN OFFSHORING
In the late 1990s, the trend was to move business operations offshore as it appeared highly attractive at the time. More recently, however, the appeal of offshoring is waning as a result of higher management and operational costs and the need for increased quality (via shorter cycle time, reduced error rate, better customer satisfaction). While offshoring will continue, it’s been our first-hand experience with our clients that companies are increasingly wary of the hidden and ongoing costs associated with offshore outsourcing.
Additionally, in some cases we’ve seen a company’s relationship with their current offshore vendor or service delivery performance deteriorate so badly, potentially to the point of contract breach. In conversations with our clients, we see that most offshore service-related issues stem from difficulty in managing those resources, especially problems in communicating requirements and offering feedback on quality. A number of factors come into play, including cultural differences, language barriers, and time zone management. Working with a team that is on the other side of the globe in a completely different time zone makes communication a lot more difficult, and we all know that communication is key for high-quality, cost and time-efficient work. Being twelve hours apart simply complicates any type of communication.
Also, longer waiting times and miscommunication because of language barriers and cultural differences can easily end up raising the costs, and this doesn’t even include the stress you experience while going through the process.
ONSHORING IS WINNING THE DAY
Clients seek flexibility and access to technical expertise and see Aesbus less like a distant supplier and more like an extension of their internal teams. A key factor here is the fact that companies are now taking a more strategic approach and prefer outsource providers who can also function as business partners. Onshore outsourcing provides companies more assurance and control than going overseas.
BEST OF BOTH WORLDS
The primary reason for Aesbus’ success as an outsource service provider is our ability to be a genuine extension of client in-house teams. We’ve seen a global shift away from low-cost solutions toward higher value services. And this is where Aesbus can provide hard-to-find expertise and technology skills to in-house teams and thus provide cost efficiencies and optimized business solutions. Our clients come to us knowing that the optimal solution is to hire additional resources externally available at short notice from a locally-based ally with proven experience on how to deliver high quality products and services, as well as access to pre-qualified and readily available specialists to work as consultants.
When it comes to onshore outsourcing in general, Aesbus can offer the advantage of consistent and close contact with client teams throughout the entire development phase for delivering on-time and on-budget in large part because of our location. One of the key reasons why Texas-based Aesbus is frequently a better option is proximity. Proximity is everything—meaning it is much easier, less expensive and a much better use of your time to hop on a plane for a face-to-face meeting with your outsourcing provider when they are in closer proximity than it is to travel overseas to, for example, India or China. And while it’s definitely not necessary for face-to-face contact all of the time, it can become necessary if a project is not going as you expected and begins to critically veer off-course.
Oh, and then there’s the time factor, which by the way, is a close relative of distance. With headquarters in Houston and a regional branch office in Colorado, we are never separated from our clients by more than four time zones, so it’s relatively simple to set up a video conference call. Now try scheduling a call with your offshore team in India. It’s likely to mean that at least one of the parties will be forced to get up too early or go to bed too late.
Offshore outsource providers reflect varying degrees of a cultural gap with American companies. In some cultures, particularly the Far East, the norm is to develop what you are told to do and not deviate from the prescribed parameters. Often, that means simply plodding forward without offering creative or important feedback as they work and progress through the process.
The creative pushback—the inquisitiveness and advice that should accompany the design and development process—doesn’t occur, resulting in multiple iterations that ultimately increase project cost while potentially delaying product delivery.
Companies conducting business in highly regulated industries like finance, government, healthcare and the military are concerned with compliance, data encryption, and security requirements.
Without a doubt, data is one of your most important assets. Just think about all of the recent data breaches we’ve experienced over the past few years. Outsourcing on American soil means you are working with U.S. citizens who are held to U.S. laws and inherently more secure than working with citizens of foreign countries. Again, Aesbus as a trusted service provider to leading-edge companies has been awarded numerous long-term service agreements and short-term contracts that require strict regulatory compliance.
TOP 5 REASONS WHY COMPANIES OUTSOURCE
There is little doubt that the trend by large, complex companies to outsource business processes will accelerate. The tactical and strategic business case for outsourcing is simply too compelling.
Onshore providers have much lower communication, training and travel costs, which in combination with automation, deliver a total cost structure (both direct and indirect) that is competitive with offshore providers without risk of an overseas engagement. Because onshore outsourcing providers can offer vertical market expertise and business continuity, they can better align with the operating culture of your organization and your marketplace strategy.
By using onshore outsource providers, like Aesbus, companies can adapt to and evolve in a global marketplace that’s rapidly changing. Outsource teams can be a customizable extension of your in-house development efforts and can help you: