Outsourcing has become very popular and affordable for businesses of all shapes and sizes.

By outsourcing tasks that require a different skill set or of a lower value, productivity can be improved, allowing more time for higher-value work. 

Outsourcing locally may be more expensive with a higher hourly rate being charged, but the hidden costs for outsourcing offshore need to be considered also. Measuring the value of outsourcing on comparison of price only means hidden costs are ignored.

Every business owner should consider the risks of outsourcing offshore, and that it may not work for their business. 

What risks do I need to consider before outsourcing offshore?

Thinking of outsourcing? Here are eight questions to consider why outsourcing overseas may not work for your business.

1. Do you have the time to invest in selecting and engaging an overseas agency, and then choosing an employee after that?

Time is money, and your time is valuable. Due diligence needs to be done to ensure an agency is reputable. Researching and investigating different agencies takes time and effort. Not gaining a recommendation for an agency is taking a gamble on using an unknown business.

Selecting an employee or employees that will best match your requirements takes up further time. Consider the benefits of removing the middle man, the agency. Instead, use the time and effort to develop a one to one relationship with a local virtual assistant.

2. Who cares for and understands your business?

Offshore virtual assistants are not business owners but are generally employees of a large organisation. Undertaking your projects or one-off jobs means working for their employer to do your job. Paid to get your task completed as quickly as possible, and not having the time to gain an understanding of your business.

A local virtual assistant, most likely a business owner themselves, will get to know your clients, industry and market as part of the service provided. It will not just be about getting a job done. Paying a little bit extra means that you are getting better value and service for your money.

3. Will you need to manage and oversee?

A hidden cost of outsourcing is the time it takes to manage and oversee. Specific and detailed instructions will need to be provided, and checking progress regularly will take effort. Consider the time spent making sure your requirements are fully understood and completed work meets your specifications.

Any savings you were making on the hourly rate may be lost if too much time is spent on managing and overseeing. A professional virtual assistant does not need to be micro-managed and will have the skills and knowledge to manage the task for you.

4. Will communication, culture and language be a barrier?

A challenge when outsourcing overseas is overcoming the barriers of communication, language and culture. Limited English skills, style of language and use of words may differ. It's important to consider whether it is beneficial to your productivity, or a hindrance. Take into account the time spent ensuring that nothing is lost in translation.

5. Is the point of difference for your business quality?

Minimising costs should not be about reducing quality. If your point of difference with your competitors is quality, it is important to ensure that outsourcing overseas will not lower your reputation. Paying for someone to do the work, and then having to constantly check and have work redone, is not beneficial.

6. Will there be ramifications for outsourcing?

The economic impact of outsourcing overseas has ramifications for Australian businesses. Considering whether there will be any backlash for your business by using an overseas contractor is important. Is outsourcing offshore an issue for your clients or your community?

The viewpoints of communities experiencing tough economic times cannot be ignored, and there are many benefits gained from paying a little extra and keeping the cash flowing locally.

7. Are you excluding your business from a network?

Being a local business is about supporting other local businesses, and creating a community. By building a strong business network, it benefits all businesses. Simply, business grows business.  By engaging an overseas contractor, you may miss out on recommendations, referrals and opportunities gained by working with other local businesses.

8. Is there a better way of doing it?

Every business owner has a unique skill set that they bring to their business. It does not mean necessarily that they are an expert in running a business either. When an accountant is engaged by a business, the expertise and knowledge of a professional are being bought to add value and minimize costs.

By outsourcing administrative tasks, you may be missing out on a better way to do things. The task will be completed, but have you gained the knowledge or expertise of an administrative professional who is up to date with technology, and can bring innovative and time-saving ideas that are cost effective and improve profits. 

"In the end, all business operations can be reduced to three words: people, product and profits. Unless you've got a good team, you can't do much with the other two." Lee Iacocca. 

Outsourcing can be advantageous, or costly. Benefits and risks need to be considered and measured against each other, ensuring the best option is chosen. The value can be soon lost with hidden costs incurred. A more expensive exercise and not as cost effective as planned. 

Services provided by local virtual assistants are different from what an overseas contractor can provide, and it's worth considering if in the long term, going local may be more beneficial then going offshore. 

What questions have you considered when outsourcing work overseas? What has or has not worked for your business?

Share your thoughts below.