Outsourcing – contracting a third party to execute services or generate commodities that were historically conducted in-house by workers is one of the hottest topics in the RPO Industry.
Enterprises that outsource are rewarded with more time and better worker assistance. Consequently, they are able to expand their operations while maintaining their competitiveness and (possibly) enhancing their products and services.
It has always been of matter of debate, whether to choose onshore recruiters or offshore recruiters.
To be honest, a lot of variables come into the equation, such as the cost of labour, the difference between time zones, the services required, and many more while comparing these two.
Let’s compare and contrast Onshore and Offshore recruiters on some specific basis, and then choose which one is the most cost-effective and best suits your company’s requirements.
Onshore Recruiters
The term “onshore company” refers to a legal business established in one’s own country only for the purpose of executing a project for another firm from the same nation with a specified jurisdiction.
According to research published by McKinsey & co., a sea shift in onshoring will propel the business forward in the next years. Now let’s have a look at some of the advantages of having Onshore Recruiters.
- Time zone is the same.
- No linguistic or cultural distinctions.
- Flexibility to complete work whenever it is necessary
- Easy communication through same language
- Less Regulatory Concerns
- Simple recruiting and onboarding procedures
Offshore Recruiters
The term “offshore company” refers to a legal business established in a different country only for the purpose of executing a project for another firm from a different nation with a specified jurisdiction.
Do you realize that the United States loses roughly 300,000 jobs a year to countries other than their own? There is a massive surge in the need for offshore hiring because of these changes. By 2025, the outsourcing market is expected to be worth $81.5 billion, with a CAGR of 3.51 percent, making it one of the fastest-growing industries in the world.
Now let’s have a look at some of the advantages of having Offshore Recruiters:
- Increased attention on mission-critical business activities
- Round-the-clock uptime
- Availability to specialized expertise
- Reduces labour expenses
- Increased familiarity with international markets
Which one is Cost-effective?
Do you know that Deloitte’s 2020 Global Outsourcing Survey found that 70% of respondent businesses adopted outsourcing as a cost-cutting tactic to reduce expenses? However, 40 per cent of respondents said that outsourcing gave the organizational flexibility needed to cope with the changes brought on by the pandemic, such as remote work and fast-paced digitization, among other things.
If 70% of respondents see outsourcing as a cost-cutting tool, so let’s find which one is less costly- offshore or onshore recruiting.
| Onshore Costs | Offshore Costs | |
| Hourly Wages/Rate | $15.00 | $15.00 |
| Labor Burden | $4.50 | $0.00 |
| Program Costs | $2.25 | $0.00 |
| Total Hourly Cost | $21.75 | $15.00 |
| Additional Cost in $ Per Hour for Onshore | $6.75 | |
| Additional Cost in % Per Hour for Onshore | 45% | |
| Assumptions: | ||
| Labor Burden Rate | 30% | |
| Program Costs | 15% |
[Ref: psgglobal solutions]
