Onshore vs Offshore: A Guide to Business Outsourcing Options
When it comes to outsourcing, is it worth keeping things close to home, or should you outsource somewhere further away and reap the cost savings?
Considering the benefits of offshoring vs. onshoring often comes down to a reductive analysis of cost vs. quality. However, those aren’t the only distinctions between the two outsourcing options—and there’s a lot of other challenges and considerations to keep in mind between the two as well.
So, which is right for you? We’ll dive into both and help you decide in this article.
Call Center Outsourcing: Onshoring vs Offshoring
When it comes to call center outsourcing, the decision often boils down to a simple cost versus quality analysis. But the choice between offshoring and onshoring brings with it a host of other considerations and challenges. So, which is the right choice for your business? Let’s dive into both options and help you decide.
The Basics of Onshore Outsourcing
What is onshore outsourcing? Onshore outsourcing refers to cases where outsourcing teams are located in the same country as your business, also frequently referred to as “domestic outsourcing.” Onshore outsourcing tends to be more expensive than other outsourcing options, but it also typically delivers higher quality levels than other outsourcing.
Here’s a quick overview of the basics:
Onshore Outsourcing Pros & Cons
Higher quality output
Higher costs compared to offshoring
Fewer security and infrastructure concerns compared with offshoring
Can be more difficult or expensive to offer 24/7 service
No language or cultural barriers to overcome means fewer miscommunications
Can be more difficult or expensive to find bilingual agents
Proximity to your outsourcing team often means higher levels of control
Easier collaboration and communication with your team
While there’s no hard and fast rules about who needs to keep outsourced teams onshore, some industries do tend to favor onshoring due to regulatory compliance, security concerns, quality needs or other concerns. Some of the industries that tend to favor onshore outsourcing include:
Legal / Law Firms
With high levels of industry regulation and a need for increased security and quality, onshore outsourcing tends to be a better fit.
The Basics of Offshore Outsourcing
However, for many companies, offshore outsourcing is a better solution. Offshore outsourcing involves outsourcing to another country, typically one located geographically far from your country of business. For US-based businesses, this often means India or the Philippines.
Offshore Outsourcing Pros & Cons
One of the most affordable ways to outsource
International outsourcing can introduce security or infrastructure concerns
Easy to offer 24/7 or overflow service due to disparate time zones
Linguistic and cultural familiarity will be lower, often leading to more miscommunications
Large overseas teams and workforces allow for easy and affordable scalability and flexibility
Lack of proximity often leads to less control and lower productivity
Usually able to find a variety of services within the same outsourcing team
Internal collaboration and communication is often more difficult due to time zone disparities and other challenges
As you can see, there’s no clear answers—while offshore outsourcing does have some drawbacks, it also has many benefits. As with onshore, there are a variety of industries who stand to benefit more from offshore outsourcing, including:
Travel and Hospitality
However, industry isn’t the only factor to consider. Your outsourcing goals, budget, needs, projects, level of control and a variety of other considerations all impact which location is right for you. In the next sections, we’ll dive into some of the key considerations, and how offshore and onshore outsourcing stacks up for each.
Cost Implications: Onshore vs Offshore
One of the biggest factors for many companies is cost. However, far too few companies consider indirect and hidden costs in their budget as well as the direct costs. When comparing offshoring vs. onshoring, here’s what to consider in terms of costs:
Direct costs. Direct costs include things you normally think of, such as wages, infrastructure, software, and overhead. In general, offshore tends to be much more affordable when it comes to direct costs. Not only are the costs of labor generally cheaper further offshore, but infrastructure and overhead costs are also lower. However, even onshoring offers some cost savings in this area—for example, when outsourcing, overhead and software costs are split amongst a variety of clients, reducing costs for you.
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Indirect costs. Indirect costs include things like hiring and staffing costs, onboarding, communication and cultural training and so on. In general, onshoring teams offer more affordability in this area because onshore teams need less communication and cultural training. However, hiring and staffing costs can be higher with onshore teams.
Hidden costs. Hidden costs are those things you can’t account for in a line item—things like turnover, transition levels, efficiency and so on. These vary greatly from call center to call center, and aren’t necessarily tied to geographic locations. Onshore teams tend to have higher levels of quality and efficiency, but turnover and high rates of transition can happen anywhere.
The important thing to keep in mind is that when considering cost implications, you want to consider the overall ROI of your outsourcing, not just the bottom line. Ultimately, outsourcing should become a profitable arm of your business, and not just an expense.
Quality and Efficiency in Delivery
Quality and efficiency are another important consideration—after all, if you don’t get quality output, you won’t get quality results.
Location often factors into quality in a variety of ways:
cultural and linguistic competence
infrastructure and technological capability
While offshore teams generally make it easier to offer round-the-clock service, due to both time zone disparities and a higher frequency of night-shift workers, quality standards and infrastructure can be easier to navigate when working with onshore teams. In addition, it’s often easier to collaborate with teams who are in similar time zones as you, despite that making it more difficult to offer 24/7 service.
One key element to keep in mind is infrastructure and international certifications—many offshore locations may struggle to offer the same level of technological ability and support as onshore teams. This means you may have more downtime, struggle with more weather-related outages, or simply not be able to offer the latest-and-greatest tech solutions.
As with many other considerations, there’s no right answer—just what’s right for you and your goals.
Cultural and Communication Considerations
This is one area where location factors in quite heavily. While onshore locations generally have a high level of cultural understanding, as agents are living in the same country as your customers, offshore locations will have varying degrees of cultural and linguistic competence.
For example, the Philippines are a popular offshoring location, and they offer a strong cultural compatibility with the Western world, which makes communication and connection with customers easier.
South Africa is an up-and-coming offshoring location, and has an extremely Westernized culture, which makes communication for US-based audiences much easier. English accents in South Africa are often described as having a “British-like charm,” which further supports high-quality communication. Tunisia is another rising outsourcing destination. With a close proximity to Europe, familiarity with Western cultures is common.
On the flip side, offshore locations like India and China don’t have the same levels of familiarity with Western cultures, which can make it difficult to achieve the level of language proficiency and cultural alignment that you want for your customers.
In addition, different outsourcing providers handle communication barriers differently. For example, with our global locations at ROI CX Solutions, we screen all potential agents early on in the search process with English proficiency exams, ensuring a higher level of fluency. We also have on-site English training and cultural training to ensure high levels of communication and cultural fluency skills.
Risk Management: Security and Compliance
Finally, risk management is a major factor to consider no matter where you outsource. Unless you have an industry-regulated reason to keep things onshore, offshoring is an option—but you should ensure that you have a high level of privacy and security at any outsourcing center. Don’t assume that a call center is trustworthy just because they’re located in the US!
However, offshoring does come with some unique security and compliance risks to manage. For example, international locations will have their own rules surrounding cybersecurity and data protection, and they may not be as familiar with US laws and regulations. In addition, the US may have additional regulations for you as a company when storing customer data or information overseas. None of this means that you can’t offshore safely, but that you need to carefully consider how to ensure you’re complying with all US-based rules and regulations, even when working internationally.
Similarly, even with onshoring, it’s not that security and privacy isn’t a concern, but rather that it has less complexity. With onshoring, you don’t have to navigate international regulations and determine legal and regulatory compliance for offshore data processing or storage.
Our teams at ROI CX Solutions—whether onshore or offshore—adhere to the same strict security and privacy standards. We comply with all major US regulations, such as:
PCI compliance for any call center processing payments or payment data
Looking for call centers with these certifications can assure you that your call center is doing everything possible to keep your team compliant, and protect your customer data.
Hybrid Outsourcing: Merging the Best of Both Worlds
Thanks to today’s modern technology and remote-first workforce, you don’t have to choose between offshoring and onshoring (unless you want to). With hybrid outsourcing, you can merge the best of both worlds by having a shared team that has some agents onshore and some offshore.
With this model, you can keep sensitive data onshore and reserve your onshore agents for more complex tasks, while making use of offshore scalability and team size to grow your team for more repetitive, formulaic, or straightforward tasks that don’t require access to sensitive data. As a result, you can shore up security and quality with onshore agents, without having to pay top-dollar for every single agent on your team. Hybrid models in this way offer a blend of affordability, scalability and quality.
However, hybrid models do have some challenges as well—for instance, collaborating with outsourced teams in multiple time zones and locations can be more challenging than coordinating with just one team in one location. In addition, if you want to visit your outsourcing teams regularly, having agents in multiple locations—or even multiple countries—can make that cost-prohibitive (not to mention very time-consuming).
As with other outsourcing models, there isn’t one right or wrong answer—just what meets your needs and goals.
Finding the right Business Outsourcing Partner
So how do you actually find the model and partner that meets your goals and needs?
Once you’ve clarified your needs, goals and objectives with outsourcing internally, you can send out RFPs to outsourcing partners you think you might like to work with. Narrowing down the locations that make sense for your team can help narrow down the right partners more easily.
You might want to work with an offshore partner if….
You might want to work with an onshore partner if….
you need to scale your team dramatically or run a large-scale operation
you need a few, highly-specialized people or a smaller team
you don’t have much budget
you need or want high levels of proximity or collaboration with your outsourced team
you need help with many straightforward, repetitive tasks
you have complex tasks or customer service inquiries that need to be handled
your customer service is generally very straightforward
you need high levels of compliance or security
you don’t need enhanced risk mitigation for your industry or company
you are looking for the highest levels of quality, fluency and collaboration available with outsourcing
Whether you’re looking for onshore or offshore outsourcing partners—or a mix of both—our teams at ROI CX Solutions are here to help. With several locations across the US, as well as teams in Mexico, South Africa, the Philippines and more, we can help you scale quality service, protect your customer data and create lasting connections with customers that drive loyalty and results.
Both have unique advantages and challenges. Onshore typically offers higher levels of quality and security, but is more expensive. Offshore tends to be more scalable and affordable, and is easier to find bilingual agents, 24/7 service and so on. However, offshore outsourcing sometimes introduces security or communication barriers that onshore doesn’t.
Outsourcing offers a host of benefits for in-house teams, including: improved service levels and customer satisfaction, better availability and scalability for customer service, more focus and availability for in-house teams to focus on core tasks, cost-savings and more.
Offshore refers to outsourcing teams who are located in a country geographically far from the place of business. For US-based businesses, this typically means the Philippines or India. Nearshore refers to outsourcing teams who are located internationally, but somewhere near the place of business. For US-based companies, this may mean Mexico or Puerto Rico.