Outsourcing–whether onshore or offshore–provides tons of business benefits. Whether your reasons for outsourcing are to achieve cost savings or access high-quality work without having to hire in-house, outsourcing can be the solution.
This article will cover the differences between onshoring and offshoring, along with their respective advantages and disadvantages, so you can make the right decision for your business today.
Onshore outsourcing is the act of obtaining services from a provider who works outside of your own company. The “onshore” part of the phrase indicates that while they don’t work in-house, they do work within the same nation as you.
For U.S.-based companies, onshore outsourcing involves partnering with another U.S.-based outsourcing company. If you need a service, chances are there’s a specialized company in the U.S. that can handle it for you. The latest figures put the number of BPO businesses in the nation at more than a quarter-million, with the number growing at nearly 5 percent per year between 2017 and 2022.
While California, Florida, and Texas have more of these businesses than any other state, they together account for only about 23,000 of them, meaning there are likely plenty of U.S.-based call centers in your neck of the woods.
So, you’ve got options. Now the question becomes, should you outsource inside the United States?
There are a number of very valid reasons that companies decide to outsource at home. These include:
Onshore service providers in your own country offer timely communications due to shared time zones, fluent English speakers for smooth real-time customer support, and a similar business culture, minimizing miscommunications. Additionally, onshoring supports the local economy and ensures quicker brand familiarity among call center staff.
There are also a few downsides to keeping your business here at home.
Onshore development involves higher labor costs compared to offshore services, and regulatory standards can result in longer startup times. Additionally, maintaining continuous operations may require supplemental outsourcing services, as it can be challenging for onshore companies to provide around-the-clock call center coverage.
Offshore outsourcing is the act of exporting your IT-related, call center services, and other business processes to another country for services. The speed of the internet means a lot of these processes can take place anywhere, while the low cost of other economies means U.S.-based companies can leverage significant cost savings by doing so.
If you’re in the United States, then offshore outsourcing involves partnering with any company that is not based in the U.S. ‘Offshoring’ technically means sending work to any other country, but it has come to mean those that are farther away (think India or Bangladesh). Meanwhile, ‘nearshoring‘ specifically refers to countries closer to home and in similar time zones. For U.S.-based business, this would include countries such as Mexico, Costa Rica or even Colombia.
Interested in these avenues? Read on and expand your understanding of nearshore vs offshore options.
Outsourcing your business processes to offshore jurisdictions can be very profitable if you do it right.
Offshore software development teams and call centers allow you to engage with a wide global talent pool of readily available skilled labor even as you enhance your brand recognition overseas. Cost-effective global talent increases your company’s time efficiency, reducing the costs of off-hours service and support coverage.
Of course, as with anything good, there are a few downsides to offshore outsourcing.
Outsourcing to a foreign country comes with plenty of challenges, even when you’re working with English-speaking staff. Time zone complications, communication barriers, and cultural differences can disrupt operations. Without the ability to readily place leadership onsite, these problems can be difficult to correct.
Differences in location, workforce, labor market, pricing and security can make onshore and offshore outsourcing experiences very different. Understanding these differences can help you make the right decision for your business. Shopping around, considering the pros and cons, taking an honest look at your business budget and considering your business priorities can help you decide what is best.
Pricing and cost-effectiveness are often the first things that come to mind when thinking about the differences between onshore vs. offshore call centers.
Offshore call centers in markets like India, South Africa, Latin America, and the Philippines are known for their low labor costs and a skilled, experienced talent pool. Many countries also offer attractive deals and incentives, such as tax breaks and subsidies, to entice businesses to outsource their call centers. However, it’s essential to look beyond these labor cost savings and consider the broader implications of this move for your budget.
Always be sure to consider the internal management costs associated with support the outsource partner in your budget. Higher costs for travel can also offset the cost-effectiveness of an offshore call center. For example, if communication barriers lead to workflow and customer service problems that impact customer loyalty or revenue, you may need an extended onsite presence to get things back on track.
This is why some experts advise businesses not to shop by price but to take quality and cultural compatibility into consideration when looking for a call center, as experienced, high-quality offshore call centers will have navigated various challenges in the past and may have solutions to common problems.
Meanwhile, onshore call centers are known for being more expensive due to higher labor and overhead costs. Still, onshoring offers several key benefits. By choosing a software development team or call center in your own country, you help support the local business economy by creating jobs. Your call center employees can, in turn, patronize their local suppliers and service providers. Additionally, onshore call centers typically experience fewer communication barriers, leading to more consistent, manageable customer service that drives increased customer loyalty. Of course, you’ll also save on travel costs for in-person collaboration and training opportunities with an onshore call center.
Nearshoring, which involves outsourcing to nearby countries, offers a compromise between onshoring and offshoring. It provides cost savings while minimizing time zone differences and cultural barriers, though other factors, such as language and cultural barriers, may still cause challenges.
In this global economy, working in different time zones may seem like no big deal, but it can significantly impact communication, workflow, and management. Understanding the implications of time zone differences for onshore vs. offshore outsourcing is crucial whether your offshore call center is in the Philippines, Europe, China, or India.
When organizations collaborate across time zones, logistical efforts become more challenging and time-consuming, underscoring the need for proactive planning. Language barriers can also add an extra level of complications when trying to communicate from different time zones. Communication becomes notably easier when teams operate in the same or similar time zone. This alignment fosters more efficient collaboration and facilitates reaching out to one another, enhancing overall operational effectiveness.
However, having partners who work on the other side of the world does have its advantages. The offset in hours means an offshore call center can provide late-night customer support, helping avoid a potential coverage gap when having 24/7 “on” hours for an onshore team would otherwise be prohibitively expensive. Just be sure to establish a communications workflow in case your offshore team needs to get in touch with someone who has direct expertise on your product or service after hours.
Because they're situated in your home country, offshore call centers inherently have fewer language barriers. Employees are typically native speakers who understand the local dialects and cultural nuances, which ensures seamless and effective communication with customers while significantly reducing the risk of miscommunication. Onshore teams can also more readily align with your company’s brand voice and customer service standards than their offshore counterparts.
Of course, these advantages come at a premium, as onshore outsourcing can have higher labor costs than running an offshore call center. However, depending on which firm you partner with, the cost-effectiveness might be offset by language barriers of varying severity. Even for offshore employees who are proficient in English, variations in accents, a poor grasp of common idioms, or a lack of cultural context can all lead to miscommunications between internal teams or customers. Low-quality customer interactions for call centers or consistent development issues for software teams are signs that additional training and oversight are needed to ensure consistency with your expectations.
Call centers exist to communicate, but language barriers can get in the way when outsourcing offshore. It's important to work with a call center that hires skilled labor, fluent in the language spoken by your customers. Even if call center representatives speak your language in their home country, miscommunications can occur due to differences in word usage and cultural differences.
Regardless of whether you’re working with an onshore vs. offshore team, set clear parameters and expectations around communication. The more clearly you communicate your expectations, the more likely you are to be happy with your call center team members’ performance.
Cultural expectations vary significantly between US-based and offshore development companies, and understanding these cultural nuances is crucial for determining whether onshore vs. offshore is right for your company.
Working with onshore outsourcing companies ensures cultural alignment with US-based companies, where it's common to work long hours with minimal holiday time but where employees may not always feel a strong sense of loyalty to their employers, often seeking better opportunities elsewhere. Direct and assertive communication is valued, with an emphasis on individual contributions and achievements. Onshore providers are also more likely to be familiar with local regulations, industry standards, and compliance requirements, reducing the risk of legal complications.
An offshore development company or call center, on the other hand, may have more frequent or culturally specific holidays that conflict with US holiday times or impact project timelines. Employees in many offshore locations tend to show greater dedication to their employers and place significant cultural importance on performing well at work. Offshore teams may also have more hierarchical communication structures that place a greater emphasis on respect and deference to seniority.
In general, a shared language, work ethic, and common understanding of business practices and expectations lead to smoother communication and fewer misunderstandings. However, by anticipating and understanding the impact of cultural differences, companies can build strong, collaborative relationships with their outsourcing partners that help achieve strategic goals.
Onshore outsourcing offers several advantages in terms of infrastructure and security. For example, due to the stringent regulatory environment in the US, an onshore development team or call center is more likely to be well-versed in maintaining high levels of security and data protection, ensuring compliance with rigorous standards such as GDPR/CCPA, HIPAA, and SOC 2. Onshore teams also typically operate within robust and reliable IT infrastructures that have advanced cybersecurity measures and protocols in place. The relative proximity of onshore teams also facilitates regular audits and physical security checks.
But while onshore teams are generally more familiar with local regulations, this familiarity can sometimes lead to a lack of exposure to diverse security practices and technologies used internationally. It can also lead to dangerous complacency.
Many offshore development teams are located in countries with rapidly growing tech industries, which invest heavily in modern infrastructure and security technologies. This can result in cutting-edge security practices and innovative solutions. Offshore teams are often highly adaptable and can implement diverse security protocols to meet international standards.
However, differences in regulatory environments can lead to discrepancies in security standards when working with offshore teams, and ensuring compliance with US regulations may require additional oversight and collaboration. Language barriers and time zone differences can exacerbate delays in the identification and resolution of security issues. Some countries may also have less stringent enforcement of data protection laws, which could pose risks to sensitive information if you’re offshore outsourcing software development.
By now, now you’ve got a good look at the differences of onshoring vs offshoring. While onshoring brings you cultural understanding, time zone convenience, and brand recognition, it will cost more and may frequently be impacted by staffing and retention challenges due to U.S. market conditions. On the other hand, offshoring will bring you cost savings, but might require a bit more focus in terms of support, brand-building, and cultural integration. The right choice will vary for each company, based on their priorities and preferences. No matter what your business activities, though, there is a BPO service company for you.
Whether they’re interested in onshore or offshore outsourcing, business owners who work with TDS Global Solutions get what they need, from inbound and outbound call center outsourcing to executive recruitment services.
So what makes TDSGS different? Well, not only do we help match you up with the perfect outsourcing company, we’ll talk you through the entire decision-making process beforehand. And if you opt for the cost-saving benefits of offshore outsourcing, we’re proud to say that we’ve overcome almost all of the typical challenges one might encounter by partnering with an outsourced team in another country.
For example, our best-in-class outsourcing partners are available at any time of day—meaning you can work live in the moment with a team on the other side of the world during your standard operating hours. Our vetting and partner selection process is intentionally designed to prevent cultural barriers from impacting your business operations. And on top of everything else, our language assessment tools ensure that your outsourced partners meet or exceed your language requirements, so communication problems simply don’t occur.
TDSGS has decades of experience finding and pairing companies with ideal-fit outsourcing partners, and is a leader in the growing nearshoring industry. Our extensive list of happy clients is a testament to the success of our model, and we’d love to help align the best-fit outsourcing partner to meet your specific business needs.
Not sure whether to choose offshore vs. onshore call center services? It’s important to talk to the experts about potential outsourcing models. Schedule a call with TDS Global Solutions to learn more about how we can help you find that perfect partner!
