The Benefits of Offshore Outsourcing in Saving Costs

1. What is Offshore Outsourcing?

Offshore outsourcing occurs when a company engages an external service provider located in a foreign country to perform tasks. This business strategy enables companies, regardless of their size, to hire individuals or teams while bypassing the expensive and time-intensive aspects like hiring processes, training, provision of office space, technology infrastructure, human resources, and payroll management. Businesses collaborate with an outsourcing partner capable of offering tailored services that meet the needs of various types of organizations across multiple sectors.

2. Reasons why choose Offshore Outsourcing

We’ve discovered that the main motivation for businesses to relocate operations overseas is to cut costs. 

Nonetheless, cost reduction isn’t the only factor. There are numerous other reasons a company might choose to offshore, as below:

2.1. Gain access to a proficient and seasoned workforce

A key benefit of offshore outsourcing lies in the opportunity to leverage the abilities, expertise, and specialized knowledge of a well-educated labor force. This approach enables your company to gain a competitive edge in the international arena by utilizing these high-caliber professionals at a considerably reduced expense.

2.2. Concentrate on Primary Business Functions

In addition to reducing expenses, offshoring enables businesses to concentrate on their main strengths. 

For example, by delegating the responsibilities of the Human Resources department to an external provider, your staff can dedicate more time to handling intricate projects. This approach can also liberate additional assets, such as funds normally allocated for hiring, allowing them to be invested in other areas, such as acquiring advanced tools for your workforce.

2.3. Around-the-clock customer assistance 

In the past, companies would shut down at day’s end. However, globalization has enabled them to extend their operations beyond traditional working hours. Outsourcing allows for business activities to proceed in different global locations. For instance, with the advancement of technology, businesses frequently communicate with their outsourcing partners through contemporary means like Google Meet and video calls. 

This capability is a major advantage, as it meets customer expectations for immediate responses, regardless of the time. The disparity in time zones between your location and that of your offshore team facilitates round-the-clock superior service, fostering customer loyalty.

2.4. Enhanced management of operations

Many companies hesitate to outsource, fearing it will reduce their oversight of business activities. Yet, by entering into a well-defined Business Process Outsourcing (BPO) contract that specifies outcomes and timeframes, firms can actually achieve greater command over their operations. For instance, outsourcing a specific project allows for precise monitoring.

3. Advantages of cost saving for Offshore Outsourcing in Vietnam

Offshore outsourcing to Vietnam has become an increasingly attractive option for businesses seeking to optimize their operations and reduce costs. The following benefits provide a structured overview of the key areas where cost savings can be realized through offshore outsourcing to Vietnam:

3.1. Labor Costs

Reduction in Payroll Expenses: Vietnam offers a highly skilled workforce at a fraction of the cost compared to many Western countries. The significant difference in wage expectations allows businesses to save on salaries, wages, and related employee benefits.

For example, a Junior software engineer in the United States has an average hourly rate of $55- $80. On the other hand, Vietnam has the average hourly rate of a Junior software engineer is $25- $30.

Readmore: Comparing Hourly Rates for Software Developers Worldwide

Training and Development Savings: With a pool of well-educated and tech-savvy professionals, companies can save on the costs associated with training and developing new employees. Vietnamese workers are known for their quick learning abilities and adaptability to new technologies and processes.

3.2. Operational Costs

Lower Infrastructure and Maintenance Expenses: Renting office space and maintaining business operations in Vietnam is considerably cheaper than in many other countries. This cost-effectiveness extends to utilities and office supplies, further reducing operational overheads.

Efficiency in Production and Services: Leveraging the time zone differences, businesses can achieve a 24-hour operation cycle without the need for overtime payments, thus enhancing productivity and service delivery at lower costs.

3.3. Tax and Regulatory Benefits

Favorable Tax Policies: The Vietnamese government offers various incentives for foreign companies, including tax holidays, reduced tax rates, and exemptions on import duties for certain sectors, which can significantly lower the cost of doing business.

Ease of Compliance: With efforts to align its business regulations with international standards, Vietnam provides a more straightforward regulatory environment for foreign businesses. This simplification can lead to cost savings in legal and compliance operations.

3.4. Communication and Coordination

Language and Cultural Compatibility: The increasing proficiency in English and familiarity with Western business practices among Vietnamese professionals eases communication and project coordination, reducing the costs associated with misunderstandings and miscommunications.

3.5. Scalability and Flexibility

Adaptability to Business Needs: Outsourcing to Vietnam allows companies to quickly scale their operations up or down based on business demands without the need for significant investment in local resources. This flexibility can lead to substantial cost savings, especially for project-based work or seasonal fluctuations in demand.

Offshoring enhances scheduling flexibility: By offshoring your business operations, you’re able to capitalize on the time zone differences to benefit your workflow.

Take software development as an instance, you can establish flexible work hours that align with those of your offshore team. Once your standard workday concludes, tasks can be passed to your offshore team, allowing work to progress. This approach ensures round-the-clock customer service and quicker delivery of products to your clientele.

Last but not least, by taking advantage of these cost-saving opportunities, businesses can not only improve their bottom line but also enhance their competitiveness and focus on core competencies. Outsourcing to Vietnam offers a blend of economic, strategic, and operational benefits that align with the goals of cost efficiency and business growth.

4. Save extra by collaborating with Sphinx

Offshoring presents an excellent opportunity for businesses to adopt strategies that are both cost-saving and efficient. The benefits highlighted are merely a glimpse into how offshoring can assist in conserving resources and reducing expenditure.

Should you consider delegating your tasks, Sphinx simplifies the process of offshoring for your tech startup. Operating from Vietnam, we are a provider of software development services. Thanks to our offshore branches in Korea and Australia, we support our international clientele in expanding their software development workforce. Choosing Sphinx means you benefit from a streamlined recruitment process and gain access to skilled developers at competitive prices.