Global outsourcing allows companies to find partners in various regions of the world to execute some (or even all) of its work for either financial or operational reasons, or both. Despite outsourcing’s savings, research conducted by IBM recently revealed that only about 27% of companies use outsourcing in an effort to cut their own costs during the expansion process. Instead, 36% use it as a viable way to spur innovation while another 37% use it as an opportunity to achieve their overall growth objectives.
It’s that last point in particular that is the most important, especially in an age where outsourcing no longer has the “low cost” reputation it once did. Indeed, the world is changing rapidly—and the very definition of global outsourcing and the purpose behind it seems to be changing along with it. Today, outsourcing can help businesses gain more market share in a number of ways.
Global Outsourcing and Market Share
Gone are the days when global organizations turned to outsourcing to replace their domestic employees with foreign alternatives. Today, much of outsourcing takes the form of strategic partnerships with more niche providers. Businesses aren’t just trying to fill a cost gap any longer; they’re trying to fill a skills gap in a way that adds value, eliminates waste, streamlines processes, and maximizes efficiency.
The skills gap is a particularly pressing concern, regardless of the type of business—or even the industry. One recent study from the Pew Research Center revealed that as many as 10,000 members of the Baby Boomer generation retire every day, and the jobs they’re leaving behind require more technical knowledge than the people who could replace them possess. The same study revealed that roughly 3.5 million new manufacturing jobs will need to be filled by as soon as 2025. But if current trends continue, as many as two million of them will go unfilled due to the challenges the skills gap presents.
Once the skills gap has been identified and outsourcing location and personnel chosen, an organization can then turn its attention to equally important topics like streamlining processes, adding value, and maximizing efficiencies wherever possible.
Global Outsourcing: Gaining Market Share
For many organizations across the globe, this market share benefit is so powerful that they’re still willing to turn to global outsourcing even as its own up-front costs continue to rise. In the Middle East, for example, local organizations are so confident in economic growth projects for 2018 and 2019 that they’re continuing to further explore opportunities to invest back in their businesses. More than 90% of respondents to one survey anticipate modest-to-substantial economic expansion within their country, which itself exceeds the worldwide trend of 85% on average.
The same study highlighted that most business leaders from the region are making these moves in an effort to fuel organic growth, with a further 77% of respondents citing their ability to better meet customer needs as a top priority. The majority of respondents cited penetrating new markets as one of their top priorities for the not-too-distant future. And, in a time when businesses in all industries face rapidly changing marketplaces, the number of businesses choosing global outsourcing too meet their needs will likely continue to rise.
Outsourcing as Part of Your Global Expansion?
Whether you’re exploring Africa or eying Asia for your global outsourcing needs, expanding with an experienced partner can help you make the most of your expansion efforts. Velocity Global and its suite of global expansion services that include its global Employer of Record solution have assisted hundreds of organizations break into new international markets—without setting up an entity. Feel you’re ready to join these organizations and grow your global footprint? Let’s chat.
Frequently Asked Questions
What are the Benefits of Global Outsourcing?
- Keeps costs low by employing in lower-cost, global economies
- Reduces financial accountability
- Adds focused level of expertise to product or service from the third party
- Hiring contractors vs employees equates to lower labor costs and allows for fast scalability
What are the Risks of Global Outsourcing?
- Sensitive information is decentralized outside of the company
- Hidden costs can arise
- Staying on schedule with third party deadlines
- Adapting to different cultures, customs, and language barriers