Onshore vs Offshore: Two Different Approaches to Outsourcing

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Most companies are too small to handle every service needed for their daily operations in-house. Even when they’re large enough to afford in-house departments for many facets of business, they usually will employ the services of outside experts too.

For small businesses and sole proprietors, outsourcing isn’t a matter of if, but how.

There are generally two approaches to outsourcing that businesses choose. Sure, they may look similar at first glance, but in reality, they’re very different. Any company or individual who’s addressing how to approach outsourcing should consider an onshore remote team that has a certain level of connectedness with the company’s daily operations like occasional office visits and participation in the company’s culture. The other option is a less involved, offshore remote service provider with the defined division from the company itself, more in the remote contractor mold.

No Shortage of Options

There are plenty of outsourcing providers, and they differ in terms of price, location, and quality of service. As any business owner or individual who has gone through the outsourcing search process knows, sometimes it’s a trial and error process. To limit the time and resources you spend tracking down the right remote service provider, consider your ultimate aim. It is going to depend on the specific service you want to outsource.

The first consideration between picking the onshore unit or offshore approach is the extent to which this remote service provider or team of providers will be a part of your company. That is, its daily operations, culture, and decision making processes. Whether you ultimately decide that they will be an integral part of the team in these business aspects or you desire a service to be completed while keeping them as a clear-cut, separate entity delivering only on their Key Performance Indicators, you have to be aware of the ramifications of each approach.

The Onshore Unit Approach: Pros and Cons

If you want a remote team with the feel of genuine, committed employees who work from a remote location, there are definite advantages. The dynamic that allows these remote contractors to feel that they have real input and participation in the company breeds loyalty, first and foremost. Once they identify personally and professionally with your company, you can expect these employees to work longer hours, take more pride in their work, and deliver on the personal investment they now have in the company.

Because these team members are likely going to be a part of the occasional in-office meetings, events, and decision-making brainstorming sessions, they’ll feel the responsibility of reflecting the company’s values while going the extra mile for their bosses. That said, this weaving of a remote employee or team into the company’s fabric and identity must be carefully considered before you extend such trust.

Your decision to engage in onshore unit outsourcing could be brilliant or nightmarish, and perhaps somewhere in between these two extremes. It depends on the qualifications and professionalism of the remote team and how well you vet the team members for potential flaws before extending the offer to become a “part of the team”.

As a remote employee becomes more familiar with the company and comfortable in their role on the team, they are inevitably going to suggest ideas and recommendations. That means finding a remote team member who can handle constructive criticism. In this case, the company is likely to benefit from the remote employee’s expertise, and if they can handle being told “thanks for the suggestion, but we’re going to pass”, they’ll continue to improve upon their niche.

On the other hand, a remote team comprised of one, and especially several, team members who feel entitled to speak up in meetings about their vision for the company without being able to cope professionally with being told ‘no’ may quickly lead to some serious hiring remorse. A disgruntled employee is every business owner’s nightmare, and if you find that an entire remote team is comprised of malcontents, you’ll quickly regret bringing the onshore remote team so deeply into the company’s fold. In an even worse case, a remote service provider may be unwilling to replace a problem employee at your request, leading to an ugly ultimatum: cut the remote team completely, and face the cost of losing quality service, or be forced to operate under the tyranny of a problem employee.

The most obvious trigger for regret when you bring an onshore remote service provider into the fold is the potential that they can’t deliver on the services promised. If they feel they’re involved in the company’s future yet can’t come through on the KPI’s guaranteed, you have a real issue on your hands. They may be nice people and all, but if they can’t do the job promised, you now face an uncomfortable separation ahead. All of that said, you may find that an onshore remote team is precisely what you had hoped and more, and eventually choose to bring them in as full-time employees. This onshore remote route to outsourcing indeed is a double-edged sword.

The Offshore Approach: Safe, but Limited

The more traditional and cost-friendly approach to remote outsourcing is the offshore approach. It’s more straightforward but also tends to be more limited in potential upside. These business relationships are most often defined by Service Level Agreements that put clear parameters on the extent of the professional relationship between a remote team and recipient.

These remote teams deliver services asked for them, and little else. The pros of this arrangement are genuine, as these services tend to be more cost-effective. The employees are likely to be more focused on clearly-defined tasks with little confusion or uncertainty about any expanded role within the company. While they’re still going to feel obligated to maintain the high quality of work to deliver on their promises, keep the professional relationship, and strengthen their reputations, the company won’t have to spend excessive time meeting with the remote team members. Also, the person or business paying for the service won’t feel any pressure to bring them into the company’s in-office culture. The business relationship is clear, and it’s limited to a contractually defined status: service provider, service recipient, end of story.

The downside is that these service providers, not feeling that they are part of the recipient’s company, may be less willing to go the extra mile in their work. They likely have other clients whose contracts also have to be honored, and dedicating unpaid time and effort to a company whose long-term plans they may or may not be in is uncommon for most remote service providers. Additionally, the remote team members will not gain the experience of coming into the office, meeting employees, and learning the company’s culture as the onshore remote team member would. It means that extra time may have to be dedicated to communicating the values that an in-office visit could provide more quickly.

The last downside to limiting a remote service provider to offshore status is the potential to miss out on valuable suggestions and expertise that the team members may have, but feel unprofessional or uncomfortable offering. That’s not their role, as the SLA often states. It may mean missing out on a potential diamond-in-the-rough suggestion or employee because of the limited scope of the service provider and recipient’s stated relationship.

For those that choose the offshore route, the lower cost of doing business and potential downsides that come with an onshore remote relationship make these disadvantages worth the risk.

To Conclude: A Matter of Preference

Now that the primary differences, benefits, and disadvantages have been defined when it comes to approaching outsourcing, you can consider your own needs. Do you desire a long-term, occasionally in-office remote team that can progressively grow with the company, or do you prefer a team that will do the job at hand, and little else?

Each company’s goals are unique, and most outsource more than one service. Each approach has its risks and upsides, and taking the right route in outsourcing any service must be weighed through the lens of the company or individual’s resources and needs from a remote team partnership.