Outsourcing vs Offshoring

The use of offshore white collar labour to achieve significant cost savings is a relatively new concept. A number of different terms have been thrown about in describing the different ways that an offshore workforce can be implemented. You may have heard terms such as outsourcing, offshoring, offshore outsourcing, remote staff or BPO, to name a few.

With all the different terminology floating around to describe this phenomenon out there it can be confusing to gain an understanding of what solution will work for you. To make it a bit easier to understand, the general concept of using an offshore labour solution can be defined as either 'offshoring' or 'outsourcing'.

Outsourcing involves the organisation using a third party provider to provide the services required without having direct managerial control over that employee, meaning that the third party has all of the control. Using an offshore solution the organisation utilised the services of an intermediary who facilitates the process whilst the organisation maintains control of the employee.

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The benefits of offshoring

Thursday, Nov 20.

Offshoring has many benefits. These are the biggest:

Nov20

The benefits of offshoring

Thursday, Nov 20.

Offshoring has many benefits. These are the biggest: 
 

Dip into a skilled labour pool. 

Many countries are suffering from a shortage of skilled labour at a reasonable price, but in the Philippines there are nearly 400,000 university graduates each year, a population of 104 million people and an average age of 22 years.
 

Grow without massive overheads.

Offshoring allows you to quickly expand your team without expanding your facilities, fixed costs, and capital outlays in your home country. 
 

Increase your core staff depth.

Offshore staffing can increase your core staffing depth, freeing up resourcing bottlenecks, adding capacity ahead of demand, and increasing your customer engagement. 
 

In-source external functions.

Functions you’ve previously outsourced, such as search engine optimisation, telemarketing, and social media management, can be brought back in-house and performed by your offshore staff for the same amount (or less than) you’re paying now. 
 

Maintain transparency and control.

You have complete transparency and control. Outsourcing doesn’t give you this, but offshoring does. You choose who will work for you, as well as their benefits, and training and career development pathways. 
 

Operate 24/7/365. 

Filipino employees are generally quite willing to work night shift and to customised schedules. The Philippines is in the GMT+8 and EST+12 time zones, so you’ll find it easy to cover hours that may be difficult locally.
 

Maintain market competitiveness.

It will become more difficult for businesses operating only locally to maintain their market competitiveness. Those who don’t take advantage of offshoring’s many benefits might find their competitors do!
 

Explore new business models. 

Offshoring allows you to reimagine the way you do business and the value proposition for your customers. This is particularly true if you’re in the professional services sectors where high-cost structures and hourly billing models are already under significant threat.
 

Focus on what matters to you.

Offshore staff can take over onerous or process-driven tasks and free you and your local staff to focus on core priorities. 
 

Develop the careers of local staff. 

Managers and other employees who learn how to establish, manage and control an offshore team will add a valuable skill to their resume. 
 

Save money. 

The savings from offshoring can be substantial. In the Philippines, salaries are typically about 20–25 per cent of those in Australia and Canada. Office rental is about one-third of the cost. Apart from electricity and internet, which can be more expensive than in your own country, all other costs are either similar to, or less than, what you’d expect at home. 
 
The cost of an offshore team in the Philippines (including our costs) is likely to be 40–50 per cent of the salary cost in Australia or Canada.  
 
Or if you compare the total cost in the Philippines to the total cost in Australia or Canada (which includes rent, electricity, internet connection, salaries, superannuation, payroll tax, workers’ compensation, HR and IT support, etc.), the total cost in the Philippines would be 65–80 per cent less than in Australia or Canada. 
 

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Using offshore Filipino Lawyers

Thursday, Oct 30.

So you have low level legal process work that you need completed but with clients demanding more for less you’re finding it uneconomical to have your junior lawyers do the tasks. What is the solution? One solution lies in the use of offshore Filipino lawyers.

Oct30

Using offshore Filipino Lawyers

Thursday, Oct 30.

So you have low level legal process work that you need completed but with clients demanding more for less you’re finding it uneconomical to have your junior lawyers do the tasks. What is the solution? One solution lies in the use of offshore Filipino lawyers.

Tell me about Filipino lawyers?

The Philippines was a colony of the USA for 15 years and as a result its education systems and universities are based on those in the US. The Philippines’ law degree is therefore quite similar to an American law degree. Students have to complete an undergraduate degree before being eligible to commence their law degree and once they obtain their degree they need to sit the bar exam. Failure rates for the bar exam are very high and in a typical year, only 20% to 25% of students will pass.

There are 105 law schools in the Philippines with the quality of graduates bearing dramatically between them. There are more than 5,000 graduates from these combined law schools each year.

How good is their English?

Law in the Philippines is taught in English and therefore the quality of both written and spoken English is very good. In addition, in the Philippines generally, English is spoken by 94% of the population and in some areas is the primary language.

What are their salaries?

A fresh graduate who has passed the bar exam, depending upon their results and which school they have graduated from, will typically be paid between $750 and $1,000 per month. A graduate who, either, has not sat or passed the bar exam will cost in the order of $500 to $750 per month.

Senior lawyers with five or more years’ experience are likely to cost between $2,000 and $2,750 per month.

What is quality of work?

As is the case anywhere, the quality of the work performed by a particular person will very much depend upon their level of training, experience and ability. With the right education, the right attitude and the right training, Filipino lawyers do of course have the ability to perform high quality legal work.

Can I hold them out as a lawyer in Australia?

No - the Philippines’ law degree is not recognised in Australia and as such you cannot hold out a Filipino lawyer as a lawyer in Australia. They can however work as a paralegal or a law clerk.

University partnerships

We are currently establishing partnerships with a number of the Philippines’ leading law schools to provide us with ongoing access to high quality Filipino law school graduates. 

If you are interested in finding out more about the possibility of using offshore Filipino lawyers at your firm please get in touch with us.

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Four Common Mistakes When Offshoring/Outsourcing

Friday, Sep 12.

Most businesses consider the use of offshore staff because of the significant savings, particularly on salaries, which can be achieved. The savings are sometimes passed through to the bottom line or, more commonly, used to add additional organisational resources to grow the capabilities and capacity of the business.

Sep12

Four Common Mistakes When Offshoring/Outsourcing

Friday, Sep 12.

Most businesses consider the use of offshore staff because of the significant savings, particularly on salaries, which can be achieved.  The savings are sometimes passed through to the bottom line or, more commonly, used to add additional organisational resources to grow the capabilities and capacity of the business.

Whilst there are significant financial benefits that can flow from the use of offshore staff or outsourced labour, taking an overly frugal approach to how your strategy is implemented and not investing in the time to do things properly is more likely to cost rather than save you money in the long run.

No/ineffective change management strategy

Considerable thought needs to be put into how your offshoring strategy might affect your local staff and how you will communicate the strategy to them. Failure to get this right can result in local staff turnover and significant resistance to the implementation of your offshore strategy. Decisions around whether staff will be made redundant with their roles being offshored or whether an organisation will simply look to add additional resource offshore need to be made early and communicated clearly to staff to avoid uncertainties.

Lack of cultural awareness

Don’t underestimate the consequences of failing to understand cultural differences. Any effective offshoring strategy should include training programs aimed at both raising awareness of local staff to the cultural nuisances of the offshore team and likewise educating the offshore team about local cultural peculiarities. Essential to bridging this cultural divide is effective and frequent communication. Usually video conference style communication will be far more effective to develop understanding as a significant amount of the message being communicated will be from non-verbal body language cues.

Rushing it

One thing that can almost certainly be guaranteed with any outsourcing or offshoring plans is that there will be teething issues. For this reason is important not to rush the process and to take your time to gradually develop an understanding as to how things best operate and over time, grow the depth of your offshore or outsourced team.

Along the way is important to manage the expectations of all stakeholders, including staff. If staff and other parties involved in dealing with the offshore or outsourced team are told from the beginning to expect difficulties and delays it is far more likely that they will provide you the time and support to resolve these issues when (and if) they occur.

Lack of support from local staff

If your first step is to make staff redundant and move their roles overseas, you may find it difficult to win support from your local staff for your strategy.  Alternatively, if your first step is to add offshore resource to free up bottlenecks or add functions that you cannot afford locally you will be far more likely to receive this support. In addition, looking to bring your offshore team members to Australia at the earliest opportunity to meet staff will assist greatly with local acceptance of those staff.

At the end of the day significant benefits can be enjoyed from a well implemented offshoring or outsourcing strategy. However, focusing on the cheapest possible approach to your offshore plans and not spending the time and money necessary to ensure that things are done properly will not only cost you more money in the long run but also likely lead to the failure of your offshoring strategy.

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