The use of offshore development center is the use of the same operation by the same company but in a different location. When dealing with offshore development centres, the offshoring is typically service-related; however, offshoring can also be product-related. Production offshoring is the relocation of manufacturing processes to a different country while the operative services remain within the company’s primary business location. Deciding of whether to use offshoring or not can be overwhelming. This article will provide pros and cons to make this choice simpler.
What Are The Pros Of Offshore Development Centers?
1: Reduced Labour Costs
Offshoring is far more cost-effective for the majority of companies. Paying a remote worker who is willing to work for lower salaries is more financially viable than paying staff members higher wages. This is particularly beneficial if you are running a labour-intensive business, such as service and manufacturing jobs where reduced labour costs can reduce the cost of operations, maximise income, and increase overall revenue.
2: Cost Saving
Aside from the employee’s salary, there are other compensatory costs that are cheaper using offshore services. Employers (that’s you!) can save using reduced social security benefits, health insurance, staff-based costs, and workers compensation. Moreover, the cost of infrastructure, utilities and materials are reduced in developing countries, such as India and the Philippines.
3: Financial Incentives And Tax Benefits
The majority of offshore destinations, such as India and the Philippines, offer financial incentives, tax holidays, and a reduced number of business regulations to attract offshore investments. The financial incentives make development of offshore centres in these countries far more affordable and beneficial.
4: Availability Of Skilled Workers
Contrary to popular belief, offshore locations such as India and the Philippines have a plethora of skilled labour available to companies. This pool of talent is often English-speaking, college degree-holding, and highly skilled in different areas of business. Using these recruits, a company can build an effective offshore business without too much capital outlay.
What Are The Disadvantages To Offshore Development Centres?
1: Communication Problems
Despite the fact that there are many English-speaking individuals, communication can still be a problem. There are degrees of understanding regarding the English language, and an accent can complicate lines of communication. When dealing with foreigners, language is not always a problem but there is the chance that it will become an issue.
2: Social And Cultural Misunderstandings
People from different countries present with different cultural and social practices. For instance, an American employer will be outspoken, but his Indian employees will be reserved based on social norms. The miscommunication can distort what is being said and can lead to misunderstandings.
As can be seen, there are benefits and drawbacks to using offshore centres. Using the information above, you can determine if this is suitable for your needs.…