Why Hire Offshore?

When people think about offshoring they often think about the cost savings (which are real), but the advantages are much more than that. And it is also not just about replacing local resources with offshore ones, but rather to help augment your local resources so you can maximize their value as well. 

In this article, I will cover the following about offshoring:

1. Cost Savings (with salary comparisons of local resources vs offshores)

2. Shortage of local talent

3. Timezone advantages/disadvantages

4. Average employee tenure

5. The different options for hiring offshore talent

1. Cost Savings & More Resources

Backoffice teams unsurprisingly receive the least amount of budget (especially in the early days). We want money to go to things that will drive value like innovation (R&D) and selling the product.

Backoffice folks are just a cost center, right?

To some degree, yes. But for example, an understaffed, burnt-out finance team can cause a lot of problems for a company:

• Important financial data is late and/or wrong

• Delayed or failed financial statement audits

• Failing to invoice customers and/or properly collect (real lost money!)

• Inaccurate financials sent to investors

Do you think investors will want to give your company money if they don’t trust the finances? It will certainly make these a lot harder…

Don’t let budget stop you from properly staffing your company, otherwise everyone will suffer. 

Check out the cost savings from the offshoring company OnlyExperts. The cost savings for back office roles can be huge!

You save money AND hire more resources to fully build out the team you actually need.

2. Lack of Local Talent

There is a growing shortage of talent in the U.S. and Europe. This is especially true for accounting/finance but also true for other back office functions. Unemployment is really low today!

Again, get the high quality talent you need at very reasonable prices.

3. Time Zone Advantages

One of the biggest concerns with offshoring talent is with the time zone differences. This is why some companies prefer to hire “nearshore” in countries close to them that are similar time zones. For the U.S. this is often Latin America.

Nearshoring is a great option - OnlyExperts primarily sources talent in the Philippines and Latin America.

But companies shouldn’t automatically ignore other timezones as part of their offshoring strategy because they are in a very different time zone:

• Overlapping working hours. Many offshore candidates are used to having some overlapping working hours with U.S. or European time zones. Ranging from 2 hours of overlap to committing to a complete overlap of working hours.

• Lower cost, better talent. There are great people in nearshore locations, but including other countries will help you find the very best talent and at a lower cost.

• Near 24/7 working coverage. Hiring in different time zones enables continual progress on things (they work on things while you sleep so you can review when you wake up!). Teams can build out plans so there is continual progression and minimize the waiting game of other team members to finish their areas. 

The above might not be as true for all teams, but I have found different time zones can be an advantage for finance teams when proper planning is done. While there certainly can be disadvantages, I think the advantages can often outweigh them.

4. Higher Average Tenure

Many people are surprised about the quality of talent you can find overseas. Often, companies have used offshore folks for simple data entry or some other entry-level stuff, but there is some top-tier talent out there.

Efficiency plummets when you have high turnover in any department. In my experience the average tenure of offshore hires can be much higher than U.S. hires. But even more important if your local hires aren’t burnt out because you are understaffed then they will also stick around longer.

Other Offshoring Considerations

Hiring people in foreign countries

A lot of companies don’t know how to start hiring overseas and there is a fear of compliance, HR, tax, etc. 

OnlyExperts will find your top tier finance, accounting, and other backoffice talent that takes all the headache away. They will fit whatever model you are comfortable with and make the process super simple.

There are three levels of compliance when hiring offshore— the timing (number of hires before being pushed to the next one) can be country specific:

1. Hire as contractors
   Cheapest and easiest to manage as you just pay like any other contractor.

2. Hire under an employment of record (EOR)
   As you have more full-time people then hiring under an EOR will prevent compliance issues. This is more expensive than #1 because you pay them as employees (taxes, benefits, etc) and there are EOR fees. This is what companies like Remote.com or Deel.com do really well.

3. Set up an entity and directly employ the hires
   Once there is a critical mass of employees you should consider setting up your own legal entity and employing everyone directly. This can be very time consuming and expensive. Consult your legal and tax advisors…

*I am partnered with OnlyExperts so feel free to email me directly and I will make sure you are taken care of 🙂