Offshore Staff: Building Your Dream Team Across the Globe

In today's globalized business landscape, companies are constantly seeking ways to optimize their operations and maximize their competitive edge. One increasingly popular strategy is offshore staffing, the practice of hiring employees from a different country to perform specific tasks.

For many businesses, the Philippines has become a top destination for offshore staffing. With its large pool of skilled and educated workers, competitive labor costs, and strong cultural ties to the West, the Philippines offers a unique combination of advantages that can help businesses achieve their outsourcing goals.

KMC Teams, a leading full-service Employer of Record (EOR) provider in the Philippines, is here to guide you through every step of the offshore staffing process. We partner with businesses of all sizes to help them build and manage high-performing offshore teams that deliver tangible results.

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Table of Contents

Introduction to Offshore Staffing and KMC Teams

Introduction to Offshore Staffing and KMC Teams

Offshore staffing involves hiring employees from a foreign country to perform tasks that were traditionally done in-house or by onshore contractors. This can include a wide range of functions, from customer service and data entry to software development and accounting.

By partnering with an EOR like KMC Teams, businesses can leverage our expertise and resources to navigate the complexities of offshore staffing. We handle all the legal and administrative aspects of employing your offshore team, including payroll, taxes, benefits, and compliance. This allows you to focus on what you do best: running your business.

 

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Introduction to Offshore Staffing and KMC Teams
What Is Offshore Outsourcing?

What is Offshore Outsourcing?

Offshore outsourcing is a strategic business practice that has gained significant attention in the global market. It involves delegating certain tasks or operations of a company to external resources located in another country. This approach is often adopted for various reasons, including cost reduction, access to specialized skills, and focus on core business activities.

 

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Understanding Offshore Outsourcing

Understanding Offshore Outsourcing

Definition and Overview

At its core, offshore outsourcing refers to the process where companies transfer some of their key responsibilities and roles to staff in a foreign country. This practice allows businesses to leverage global talent and resources, often at a lower cost than if these tasks were performed domestically.

 

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Understanding Offshore Outsourcing
Types of Offshore Outsourcing

Types of Offshoring

  • Outsourcing of Non-Core Business Functions: This type involves outsourcing parts of the business that are not central to the company's primary operations. For instance, a company might outsource its IT needs if it does not specialize in IT services. This allows the company to focus on its core competencies while still benefiting from expert services in other areas.

  • Partnership with External Agencies: In this model, companies collaborate with external partners, such as Remote Employee, to facilitate offshore staffing. These partners provide a way for businesses to have offshore employees who are managed and trained directly by the company. This approach ensures that the offshore team aligns with the company’s values, culture, and quality standards.

 

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Key Areas  of Outsourcing

Key Areas of Outsourcing

Offshore outsourcing is not limited to any specific business function. Companies are known to outsource a variety of responsibilities, including but not limited to:

  • IT Services: Outsourcing IT responsibilities is common, given the technical expertise required and the rapid pace of technological advancements.
  • Research and Development (R&D): By outsourcing R&D, companies can tap into specialized knowledge and innovative capabilities available in other countries.
  • Manufacturing: Many companies outsource manufacturing to take advantage of lower labor costs and advanced manufacturing technologies in other regions.
  • Sales and Marketing: Outsourcing these functions can provide access to local market expertise and cost-effective marketing strategies.
  • Customer Service and Support: This allows companies to offer around-the-clock support services by leveraging time zone differences.
  • Administrative Functions: Tasks like data entry, payroll processing, and HR management are often outsourced to streamline operations and reduce costs.

 

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Key Areas  of Outsourcing
The Business Rationale for Offshore Outsourcing

The Business Rationale for Offshore Outsourcing?

Cost Reduction
One of the primary reasons companies opt for offshore outsourcing is the significant cost savings it offers. Lower labor costs in certain countries can drastically reduce overall operational expenses.

Access to Specialized Skills
Offshore outsourcing provides businesses with access to a vast pool of talent and specialized skills that may not be readily available or affordable domestically.

Focus on Core Activities
By outsourcing non-core functions, companies can focus their resources and efforts on the primary aspects of their business, driving growth and innovation.

Global Expansion
Outsourcing can be a stepping stone for businesses looking to expand globally, providing insights into new markets and facilitating international operations.

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The Business Rationale for Offshore Outsourcing 2

As an Employer of Record (EOR) company, KMC plays a crucial role in bridging the gap between global businesses and the rich talent pool in the Philippines. This service eliminates the need for companies to incorporate in the Philippines, simplifying the process of international staffing. Renowned clients like Zoom, Airbnb, eBay, Asana, and Peloton have utilized KMC's EOR services, resulting in significant reductions in staffing costs, with savings reaching up to 70%.

By managing employment responsibilities and compliance, KMC allows these companies to focus on their core business operations while benefiting from access to a skilled and diverse workforce in the Philippines. This approach not only reduces operational complexities for businesses looking to expand globally but also provides them with a competitive edge through cost-effective staffing solutions and access to a wide talent pool.

 

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The Business Rationale for Offshore Outsourcing 2
Is Offshoring of Uncommon 0

Is Offshoring Uncommon?

In the age of hyper-connectivity, geographical boundaries are blurring for businesses. The question of "offshoring uncommon?" is no longer a simple yes or no. It's a nuanced dance between cost, efficiency, talent, and a complex web of geopolitical factors. To untangle this, let's delve into the data from both sides of the Pacific: the US and Australia.

The United States:

For decades, the US has been a poster child for offshoring, particularly in manufacturing. Driven by lower labor costs and access to new markets, American giants like Apple and Nike shifted production bases to Asia.

But while some industries bring jobs back, others embrace the offshore wave. The US tech sector, for example, heavily relies on offshore talent for tasks like software development and customer service.

A 2023 Hired report revealed that nearly 40% of US tech companies have offshore teams. This trend is likely to continue, driven by the global talent pool and the cost benefits of offshore hiring.

Is Offshoring of Uncommon 1

Australia:

Australia's offshoring story is unique. While geographically isolated, the country has actively embraced offshore outsourcing, particularly in professional services like accounting, legal, and IT.

A 2022 McCrindle Research report found that 70% of Australian businesses outsource at least some of their functions. This is driven by factors like a skilled but expensive domestic workforce and the proximity to rapidly growing Asian markets.

The Global Picture:

So, is offshoring uncommon? The answer is a resounding no. It's a strategic tool used by businesses of all sizes, across industries and geographies. But the landscape is evolving. Companies are increasingly adopting a hybrid approach, balancing the cost benefits of offshore with the need for local talent, security, and control.

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Is Offshoring of Uncommon 1
Is Offshoring of Uncommon 2

Cost Reduction
One of the primary reasons companies opt for offshore outsourcing is the significant cost savings it offers. Lower labor costs in certain countries can drastically reduce overall operational expenses.

Access to Specialized Skills
Offshore outsourcing provides businesses with access to a vast pool of talent and specialized skills that may not be readily available or affordable domestically.

Focus on Core Activities
By outsourcing non-core functions, companies can focus their resources and efforts on the primary aspects of their business, driving growth and innovation.

Global Expansion
Outsourcing can be a stepping stone for businesses looking to expand globally, providing insights into new markets and facilitating international operations.

Is Offshoring Uncommon 3

Industry variations:

Technology: The tech sector heavily relies on offshore talent for coding, software development, and customer service, drawn by the global talent pool and cost benefits.

Professional services: Accounting, legal, and IT services experience high outsourcing rates in developed countries like Australia due to the availability of skilled labor in other nations at reduced costs.

Retail and hospitality: These sectors tend to outsource less due to the importance of local customer service and physical infrastructure.

Country comparisons:

US and Australia: Both countries show high outsourcing rates, driven by different factors. The US, with its vast domestic market, emphasizes offshoring in manufacturing and tech for cost advantages. Australia, with its smaller population, leverages outsourcing in professional services due to limited local talent availability and proximity to Asian markets.

Emerging economies: Countries like India and the Philippines have become prime destinations for outsourced services due to their large, educated workforce and competitive labor costs. However, concerns about data security and intellectual property theft are prompting some companies to reconsider.

Europe: European countries tend to outsource less than the US and Australia due to factors like strong labor unions, high social safety nets, and regulatory hurdles. However, certain sectors like IT and customer service are seeing rising levels of outsourcing.

Is Offshoring Uncommon 3
Types of Business Processes Commonly Outsourced

Types of Business Process Commonly Outsourced

The Philippines has become a popular destination for companies seeking to outsource various business processes. Its combination of English proficiency, competitive labor costs, and a large skilled workforce makes it an attractive option. Here are some of the most common business processes outsourced to the Philippines, along with the available talent pool in each area:

1. Customer Service:

Types of outsourced tasks: Call center operations, email & chat support, technical support, social media management.

Available talent: The Philippines boasts a large pool of customer service professionals with strong English communication skills and cultural sensitivity. Many have experience handling calls from diverse international clients. Additionally, a growing trend towards multilingual support agents catering to specific markets is evident.

Over 1.4 million Filipinos work in the business process outsourcing (BPO) industry, with customer service representing a major segment. 70% of Filipinos speak English fluently, and the country boasts a young and educated workforce.

IT and Software Development

2. IT and Software Development:

Types of outsourced tasks: Web development, mobile app development, software testing, IT infrastructure management, cloud computing services.

Available talent: The Philippines has a thriving IT sector with a significant number of skilled programmers, developers, and system administrators. The Philippines has over 600,000 IT professionals, with expertise in various technologies like Java, Python, and cloud computing. The government's focus on STEM education is further propelling this sector.

3. Accounting and Finance:

Types of outsourced tasks: Bookkeeping, payroll processing, accounts payable & receivable, financial reporting, tax preparation.

Available talent: Over 60,000 Filipinos hold accounting certifications like CPA or CMA. Additionally, the country has a robust financial services industry, contributing to a well-trained workforce.

IT and Software Development
4. Administrative and Data Entry:

4. Administrative and Data Entry:

Types of outsourced tasks: Data entry, document processing, transcription, virtual assistance, scheduling, travel arrangements.

Available talent: The Philippines has a large pool of detail-oriented administrative professionals with strong data entry and computer skills. English proficiency and accuracy are key strengths. Additionally, the growing trend towards virtual assistants offering personalized support services is noteworthy.

5. Creative and Design:

Types of outsourced tasks: Graphic design, animation, video editing, content writing, translation, social media content creation.

Available talent: The Philippines has a burgeoning creative industry with talented artists, graphic designers, and editors. Expertise in various design software and strong visual communication skills are common. Additionally, the country boasts a significant pool of multilingual writers and translators catering to diverse content needs.

Beyond these common areas, other processes like human resources, legal services, and medical transcription are also seeing increasing outsourcing to the Philippines. The availability of specialized professionals in these fields is continuously growing, offering a wider range of outsourcing options for companies.

Beneficiaries of Offshore Outsourcing: A Win-Win Scenario

Beneficiaries of Offshore Outsourcing: A Win-Win Scenario

Offshore outsourcing offers a multi-layered benefit structure, impacting individuals, businesses, and even entire economies. Let's dissect how it benefits the Philippines and its inhabitants, while simultaneously solving problems for companies:

Benefits for the Philippines:

  • Economic Growth: Offshore outsourcing acts as a significant engine for the Philippine economy. The BPO industry contributes 12.6% to the Philippine GDP and is projected to reach 15% by 2025. It attracts foreign investments, creates jobs, and increases foreign exchange earnings. The BPO industry alone employs over 1.4 million Filipinos.
  • Job Creation and Poverty Reduction: Outsourcing provides high-paying, stable employment opportunities for skilled and semi-skilled workers. This translates to improved living standards, poverty reduction, and increased domestic consumption. The BPO industry has lifted over 6 million Filipinos out of poverty since 2000.
  • Skill Development and Knowledge Transfer: Working with international clients exposes Filipino professionals to global best practices, cutting-edge technologies, and diverse projects. This enhances their skills, fosters knowledge transfer, and creates a more competitive workforce.
  • Infrastructure Development: The BPO boom has spurred investments in infrastructure development, including telecommunications, technology parks, and educational institutions. This benefits not just the outsourcing industry but the entire nation.
Beneficiaries of Offshore Outsourcing: A Win-Win Scenario
Benefits for Companies

Benefits for Companies:

  • Cost Reduction: The primary driver for companies to offshore is the significant cost savings achieved through lower labor rates in the Philippines compared to developed countries. This translates to increased profitability and improved competitiveness.
  • Skill Access: Offshore outsourcing allows companies to tap into a wider pool of skilled talent available in the Philippines, addressing skill shortages in their home countries. This ensures access to qualified professionals for niche tasks.
  • Operational Efficiency: By outsourcing non-core functions, companies can free up internal resources and focus on their core competencies. This improves operational efficiency and allows for strategic business growth.
  • 24/7 Availability: The Philippines' favorable time zone difference allows companies to access round-the-clock services, enhancing customer support and productivity.

Offshore outsourcing creates a win-win situation for both the Philippines and companies. The Philippines experiences economic growth, job creation, and skill development, while companies benefit from cost reductions, access to talent, and increased operational efficiency. The ideal scenario is one where both parties strive for a balanced and sustainable partnership, maximizing the benefits while minimizing the potential drawbacks.