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Offshore Outsourcing – 5 Myths Debunked.

Have you bought into these common offshore staffing myths?

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Have you bought into these common offshore staffing myths?

When conversation turns to hiring staff offshore, our team are met with mixed responses. From excitement to raised eyebrows, from curiosity to outright abuse.

There’s a perception that hiring people offshore means firing everyone employed in the business and replacing them with ‘slave labour’ in another country.

I can understand that it might have been like that 30 or 40 years ago, but in the 21st century, things are very different!
Communications and technology have improved, allowing for global mobility when it comes to ‘working’. The ease and low cost of communication has opened up opportunities for staff in less developed countries to actually earn more and take more control of their jobs.

We received an email from someone who threatened to remove themselves from our mailing list because we hired people from the Philippines and helped our clients do the same to access low cost labour. They said that we were taking jobs and taking advantage of ‘poor people’ which made me laugh because it couldn’t be further from the truth.

What does the reality of offshore outsourcing and staffing really look like?

Sure, big corporations have been known to abuse people, but if it’s done right, offshoring staffing usually produces a win-win result for all.

I regularly explain to people how hiring two people offshore initially helped us hire ten people locally in our first two, and most difficult, years in business.

Rather than reduce jobs we actually created 5x more jobs locally than offshore whilst our offshore staff are able to enjoy a similar lifestyle to top ranking economic nations. This often leaves them speechless, and a little curious about how they can achieve the same!

Statistical evidence has shown Australia to be the net beneficiary of offshoring activities in terms of employment. This data shows the reporting of massive job losses are not able to be proven. Likewise, economic analysis shows a similar net gain.

This highlights an important point that’s regularly missed from the offshoring conversation. Cutting costs from a business is able to keep them competitive and more likely to achieve sustainable growth. In turn, this business growth contributes more to the economy, including MORE local jobs in the long term, not less!


How does offshore staffing make local growth possible?

Employees account for up to 80% of fixed costs for most businesses. So, for a business to free up cash and improve profitability, reducing the cost of employees can be an obvious place to start.

Whenever a big business is struggling to achieve profit, that’s when we often hear the word redundancy. First contractors get shown the door then the business will undertake a rationalisation of staff, services and expenses. Jobs are consolidated and staff get the boot!

As the business approaches a sustainable, cash positive bottom line, big businesses will start to implement growth projects and rehire locally to meet demand. Often they start with specialist contractors and then with permanent employees.

The way we hire offshore is different. Our primary focus is on profitable and sustainable business growth and job creation, not slashing costs to improve the bottom line. Hiring an offshore staff member creates more capacity in a business when they are unable to.

Offshoring is an unfamiliar topic for most business and there is plenty of misinformation and misunderstanding out there. Here’s some insight into a few common myths.


Myth #1 Offshoring reduces jobs locally

The media are quick to pick up on a story when a big business goes on a cost cutting drive and outsources entire departments offshore. The resulting loss of local jobs has led to a very negative perception about businesses hiring offshore staff.
Whilst wholesale cuts made by big corporations definitely result in local job losses the net outcome can be very different in the case of micro, small and medium enterprise.

To give an example: A business approaching capacity is likely to have to turn away work if they can’t afford the $60K+ that it might cost to take on a new employee. However, they might be able to afford $20K to employee someone offshore to take on some of the load. In turn, this enables them to take on new business and continue to grow.

We make a perfect case study. When I started Magnetic Alliance one of my first moves was to hire two staff members in the Philippines. This enabled me to delegate, get more done and scale our business and employ ten people locally in Adelaide, South Australia.

As we have grown, the Magnetic Alliance Group now have increased to four staff in the Philippines with a local team of 20+. For every one employee based in the Philippines, we are employing around five people locally and have been able to help our clients grow. (link to Juen Testimonial & infographic)


Myth #2 Offshore workers have poor working conditions

The perception offshore workers have poor working conditions is fundamentally untrue. Unfortunately, extreme examples of sweat shop working conditions in manufacturing have resulted in a negative perception of hiring offshore.

Yes, offshore workers are paid less per hour than an Australian doing the same job. However, their rate of pay is aligned with what’s expected locally.

As I mentioned above, the Philippines based offshore staff who we employ are able to enjoy the same standard of living as you would expect for an equivalent staff member here in Australia.

They get massages, watch Netflix, go out for coffee and are able to afford to buy a house and even do things highly paid Aussies can’t afford.

We ensure the staff we find for our clients have appropriate access to internet, office facilities and equipment. We also work with our clients to put the right systems in place for managing their offshore team.

By working for Australian companies like us and our clients, we actually give them many benefits they can’t get working locally like:
Saving 3-4 hours travel time in terrible traffic each day. By working from home, your offshore staff member gets more free time!
Reducing the risk of being mugged. Due to crime, and overpopulation, there is a lot more petty-crime. This can be pretty scary because thieves might rob you at gunpoint just to take a wallet and phone.

Save staff from buying food which saves them money. Since they have a home based remote working environment, they can eat at home rather than having to buy an expensive, takeaway lunch. H2 Myth #3 Work outsourced offshore is low quality & their English is poor.

If you’re looking on Fiverr or Upwork for someone to whip you up a new logo, edit a video or create a website it’s probably going to take some time to find someone who does a high-quality job. When we employ an offshore staff member, who is an ex-team leader at Accenture, client services manager from HSBC or account executive at JP Morgan, you can expect a more decent standard of work.

Magnetic Alliance have a rigorous screening and recruitment process in place. We also ensure that our clients are properly able to manage new staff members to get the best results possible.

The Filipino school system, along with most things about the Philippines, has become highly westernised. Most universities have American standards; meaning that individuals can study and complete their degree in the Philippines, then work in the United States.

As a result, the English literacy rate in the Philippines is very high. Both spoken and written English is to a high standard so the quality of work that you’ll get can often be of the same standard you can expect from a local employee.


Myth #4 Offshoring is all about cost saving

Sure, in the case of big corporations moving entire departments offshore and making local staff redundant is definitely about cost saving.

For small and medium businesses, this is not so much the case. It would be unusual for us to recommend that a business sack local staff in favour of an offshore team. This would only be done to save a business in severe financial crisis, and knock-on-wood, we have never had to do this!

The offshore staffing we do is designed to help a business achieve its growth goals. The premise is to shift lower value, but essential, tasks to lower cost staff. In turn, this frees up time and capacity for the business owner and other members of the team to focus on higher value, income generating activities.

You’ve probably heard people say they want to ‘spend less time working in the business and more time working on it’. That’s what an offshore team member can help you do.


Myth #5 Offshoring means outsourcing

It’s important to clear up these terms as it can often lead to confusion. Outsourcing and offshore staffing are two different things.
When a business ‘outsources’ work it is completed by an external provider. This might be a freelancer or agency. They might be offshore, but they don’t have to be. It’s like hiring a marketing firm to generate leads for example, that's outsourcing you'd probably do locally.

Outsourcing is good for small projects that you need completed or bigger projects that are best done by an expert in the field and are one-off in nature.

When you hire an offshore staff member, they become part of your team. You are responsible for managing and training them. For the most part, they are exactly like a member of your team who is employed locally, the obvious difference being they’re located in the Philippines.

Instead of interacting face to face, you can use video conferencing software like Skype or Zoom, email and instant messaging to communicate with them. Work organisation and file management is done using cloud based tools like Dropbox.

The benefit of Offshoring vs. Outsourcing is that you control the staff, the training, the systems, and the process. With today’s technology, Offshore staffing is almost like having someone working in the same city, working remotely from home on their laptop!


Want to learn more about offshore staffing?

If your business is experiencing signs that you’re ready to go offshore, check this 3-part mini video series and guide on what you can delegate. To learn more about offshore staffing, check out our blog "6 Signs Your Business Is Ready For Outsourcing Jobs"
 

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