Think of offshoring as a solution to build additional muscle around your core – not replace it.

Offshoring is less about cost management and more about unlocking scale, speed and more capabilities. When thoughtfully implemented, it can help your company access specialized talent, increase flexibility and drive operational efficiencies so you can use limited financial and human resources to maximal effect.

For many growing companies, the question isn’t whether to offshore or not. It’s how to do it in a way that strengthens your existing team. In this GrowthBit, we’ll look at some of the key considerations for turning offshoring into a competitive advantage and a powerful strategic lever for growth-stage businesses.

Rethinking the value proposition of offshoring

Offshoring isn’t about outsourcing ownership. Yes, it can help you ramp up operations while minimizing operating costs, but it potentially delivers a host of other benefits like providing 24/7 continuity, enabling faster delivery cycles and creating space for your internal team to focus on innovation and strategic priorities. Think of offshoring as a solution to build additional muscle around your core – not replace it.

Offshoring can also connect you to specialized talent that’s difficult and time consuming to source. The right offshore providers are expert recruiters, and hiring top talent is a core competency. Tapping into this resource can help lighten the load for your organization and enable you to deploy the talent you need faster. Ultimately, it’s about speed to execution. If your team is racing to hit key milestones, capture market share or launch new products, offshoring can help you mobilize ahead of the competition.

Building a high-impact offshoring strategy

Optimizing the impact of your offshoring engagement means going into it with a clear idea of how it will drive your company’s growth strategy. Here is a recommended 4-step process to build your strategy:

1. Assess Your Core vs. Non-Core Activities: Core activities, tasks central to your value proposition like product development and strategic decision-making, we believe should always remain in-house. But non-core activities, tasks like customer support, data entry and standard development work, could be appropriate targets for offshoring.

2. Evaluate Skillsets and Specialization: Identify the roles requiring high-level expertise and direct alignment with company culture. Those are best kept in-house. The niche skills that support those roles and are routine, process-driven, or standardized can be options for outsourcing.

3. Determine Resource Needs and Potential Cost Savings: Evaluate your workload distribution to understand the volume of work across teams to determine which functions can be scaled with offshore resources. Next, analyze the cost difference between hiring in-house vs. outsourcing those resources to decide what is most beneficial to your business.

4. Set Strategic Offshoring Goals: Align your offshoring decisions with long-term business goals, considering how you will structure the work and partnership.

  • Choose your engagement model: If you want to minimize the management burden for your internal team, full-function outsourcing (in which the offshoring company manages an entire business function; Accounts Payable, for example) may be the right choice. If you prefer to build collaborative teams, resource augmentation, where you add one or more specialized resources to your internal team, may be a better fit. You can also opt for hybrid models that combine aspects of both to deliver the right mix of flexibility and control.
  • Lay the right foundation before offshoring: Success starts with internal clarity. Ensure that you define the specific responsibilities being offshored, assess your team’s readiness for distributed work, and align on strategic goals like speed, scale or cost efficiency. Without this groundwork, even top-tier offshore partners can fall short.
  • Choose the right offshoring partner for your needs: Consider geographic alignment (nearshore vs. offshore), time zone compatibility, security standards, recruiting capabilities, and cultural fit. Your ideal partner should be able to scale with you, match your specialization needs, and plug into your workflows with minimal friction.

 

offshoring engagement models infographic

Case studies: The offshoring road to growth

Offshoring is increasingly prevalent among growth companies: more than 80% of our portfolio companies offshore at least one of their processes or operations. Here’s how two SaaS businesses have leveraged offshoring.

Scaling development sustainably

For example, TrueLearn, an LLR portfolio company, provides online test preparation to healthcare institutions, students and residents. They needed to grow significantly and scale software development without increasing overhead.

They partnered with a full-function offshore provider, which enabled them to outsource the development burden and reduce the cost of sourcing, interviewing, hiring, and administering payroll for in-house developers.

The key challenge for TrueLearn involved navigating time zone differences. The internal team implemented structured workflows and created asynchronous communications, including video instructions, to help ensure the offshore team had what they needed to stay productive overnight.

The experience taught them that culture and infrastructure was as important as the quality of the talent: laying the groundwork for a seamless workflow helped enable them to scale up the development function without taking on the administrative burden of a much larger team.

Accelerating time to innovation

RealTime, an LLR portfolio company and software solution provider to the clinical research industry, needed to modernize DevOps and accelerate the innovation pipeline through CI/CD (continuous integration, continuous delivery/deployment). They now work with an offshore team in Eastern Europe to test software infrastructure before it’s deployed for North American clients.

RealTime discovered that building in the appropriate levels of control was critical to success. To ensure testing met their rigorous standards, they leveraged global security and quality certifications, such as SOC 2, HIPAA, PHI and PII, created detailed user requirements and specs, and established KPIs to track and quantify the offshore team’s success. By focusing on quality control, the company has maintained faster deployment cycles at a reduced cost.

Set yourself up for offshoring success

Offshoring can bring up concerns around choosing the wrong offshoring partner and introducing operational and reputational risk. These best practices can help you preempt those risks and set the initiative up for success.

Clarify the strategy. Before seeking a vendor, decide what you want to achieve, including the roles you need to fill, the skills you need access to and the ratio of in-house to offshore talent you’re comfortable with.

Start small. If you’re new to offshoring, test it out with a few roles before scaling up to bigger teams or entire operating functions.

Manage proactively. Set the expectations before your offshore partner can deliver on them. Set clear KPIs and establish robust communication protocols and accountability frameworks to maintain alignment. Clearly communicate to your internal teams that you’ve decided to utilize offshoring and what benefits it has to their roles and the business.

Mitigate risk. Ensure offshore vendors have strong data security policies in place and can work within the oversight and compliance frameworks you set. If you’re offshoring client facing roles, prepare messaging around the benefits to the customer of using this model in case customers ask.  Prepare your teams with this messaging.

Engage your team. Invest in robust onboarding and continuous training, treat offshore employees equitably and encourage collaboration between offshore and in-house team members.

Establish a feedback loop. Build in regular check-ins not just for performance tracking, but for learning and adjustment on both sides. Encourage offshore teams to share process improvement ideas or roadblocks and ensure there’s a channel for internal teams to raise concerns or suggestions.

Here’s the bottom line.

Offshoring can feel intimidating at first, but it’s a growth lever that’s worth exploring. Start with a clear idea of how offshoring will accelerate your growth, choose the right delivery model, start with a low-risk pilot, set and track KPIs and support a culture of collaboration. Offshoring can transform scalability and efficiency, enabling your internal teams to focus their efforts on the core activities that help drive your market advantage.