Insight: 7 Risks of Outsourcing Offshore

There’s no denying it – outsourcing offshore sometimes battles an image problem. For all the benefits that come with using a remote employee to perform services traditionally undertaken in-house, there are people who believe the risks outweigh the positives and therefore continue on the staffing path they always have.

There is an alternative, of course. Risk mitigation is a standard aspect of business life and can equally be applied to the outsourcing model – or, as we prefer to call it, remote staffing. Rather than forgo the opportunity to reduce costs, increase efficiencies and boost productivity by partnering with a quality staffing business, it makes better sense to identify potential challenges and find ways to remove them or, at the very least, reduce the impact they may have.

There is a reason studies have found almost 80% of global businesses feel positive about their outsourcing partners – it works. Like any corporate strategy though, success does not happen by chance and that is why we have compiled this list of seven risks associated with remote staffing and, more importantly, how to reduce or eliminate them to increase your chances of teaming with a winning provider.

Risk 1 – Partnering with an unreliable company

Befitting an industry valued at more than $375 billion in 2022, outsourcing can attract operators who put profits over quality and do not always deliver what they say they will. Your staffing needs are too important to roll the dice on the unknown, especially when it involves tapping into overseas resources. Look for a supplier with a local management presence, proven track record in staffing and talent development, and tools that foster transparency and communication. Such credentials provide peace of mind compared to trying your luck on a provider that you – or many others – have never heard of.

Risk 2 – Being caught out by foreign compliance and regulations

There are few things worse than deciding to ease your load by remote staffing, only to discover you still have plenty of work to do. Not all providers are the same, with some saying they can provide talent but failing to mention you will be heavily involved in candidate vetting and forced to navigate local compliance law and regulations, let alone how to actually pay them. Then there are operators that look after the paperwork as an employer of record but leave it up to you to find talent. Avoid headaches by teaming with a firm that offers an end-to-end solution, with everything from talent sourcing, candidate vetting and onboarding to compliance and data security taken out of your hands.

Risk 3 – Poor local market knowledge

Remote staffing is ultimately about accessing the best talent from specific offshore markets and some providers simply do not have systems in place to deliver quality. Look for a partner that can clearly outline the steps they take to nurture local talent pools and vet candidates to ensure the right people end up in the right roles.  For example, a four-stage pre-qualification process can assess every job applicant for English language proficiency (written and spoken), behavioural attributes, previous Western company experience and high degrees of competency or certification in all major software platforms. This way only the top 5% of applicants make it to the candidate shortlist put in front of their clients.

Risk 4 – Lack of urgency

Speed may be of the essence when it comes to remote staffing but some businesses find that is not the case for all providers. There is no reason to wait months for a team member to start when many experienced operators have processes in place that allow them to find and deploy talent fast. By assembling pre-vetted talent pools, they can shortlist candidates within eight hours and have them working in your business within a week. Make sure you move quickly, as the best remote candidates for you might go elsewhere in this talent short market.

Risk 5 – Increased legal and data security threats

When using offshore talent, it would be nice to think your remote staffing provider ensures everything is done by the book. Sadly, that is not always the case. Some businesses have found themselves in difficult situations not of their own making, which is why every effort should be made to find a staffing partner that can exhibit an ironclad commitment to privacy, secure data handling and local workplace laws. For example, flexhive by Hudson has access to local pay and compliance in more than 190 countries and its remote worker Virtual desktop solution, powered by a partnership with ThinScale, ensure client data is always secure.

Risk 6 – Hidden costs and lock-in contracts

There’s an old saying that if a deal seems too good to be true, it normally is and that is no different in the remote staffing world. Some businesses have been caught out by signing on for a low fee, only to receive invoices for much more when ‘extras’ are factored in. Find a provider that offers a fixed, all-inclusive monthly fee and, better still, one that does not require upfront deposits to reduce your initial cash commitment. Being locked into long-term contracts can also be costly when promises are not delivered upon.

Risk 7 – Hesitation from in-house teams

A move towards remote staffing can be met with resistance among onshore employees, be it fears about job security or simply the unknown. Take the time to outline the concept and its many benefits to team members and aim to build a culture of advocacy among managers and other influential voices. Some providers are even confident enough to prove the value of their remote staffing capabilities by not asking for an immediate cash outlay or offering an incentive such as a Free Replacement Guarantee that allows clients to replace a remote team member at no cost.

Summary

In many ways, remote staffing is no different to any other aspect of business life. Do it well and you can reap the rewards that come with a resourcing model that delivers great returns on investment. Done poorly, however, and it can result in negative results. The key is to do it right and that starts with making a commitment to find a provider that has the people, systems and processes to mitigate the risks outlined above.

The very nature of offshore outsourcing means trust is non-negotiable. Discover five tips for finding a remote staffing partner that can be trusted to deliver from day one.