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    Offshoring

    Find the Talent You Need by Freelancing, Outsourcing, or Offshoring

    The talent shortage is a challenge among businesses globally. A survey in 2024 revealed that the average rate of the lack of talent worldwide is 75%. As a result, companies and organizations are innovating their talent acquisition strategies.

    Instead of traditional hiring, offshoring, freelancing, and outsourcing have emerged as viable solutions to meet organizational demands. For companies considering shifting their recruitment and talent acquisition strategies, freelancing, outsourcing, and offshoring may be unexplored options. 

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    These alternative types of talent discovery have their advantages and disadvantages. Knowing the pros and cons of each one may help you choose which way is the most optimal for you.

    What are Freelancing, Outsourcing, and Offshoring?

    Freelance Work

    Freelancing is a way of working where professionals take in specific workloads from clients. However, they do not commit full-time to one single client. 

    Companies may tap freelancers to complete or perform certain tasks or projects. Reasons for choosing freelancing services may include:

    • Lack of talent
    • Seasonal or temporary increase in workload for the company
    • Need for non-core support

    Freelancers are usually found on freelancing sites as well as social media.

    Outsourced Work

    Outsourcing, on the other hand, focuses more on a business operation, project, or task. This particular work is then delegated to a third-party service provider or an individual contractor. 

    The outsourcing service provider or contractor may be in the same country or overseas. Workers are usually full-time employees of the service provider or contractor.

    Companies can use outsourcing to fulfill work much larger in scope than work assigned to freelancers. 

    Reasons for using outsourcing may include:

    • Large-volume work that one or a few freelancers cannot do
    • More consistent and reliable support

    Offshore Staffing

    Offshoring is an alternative to both freelancing and outsourcing. This business strategy involves transferring organizational operations to a different country. Certain functions or processes are rolled out in an overseas location. Offshore team members are full-time employees of the company or organization.

    Remote team management is better with offshoring

    Offshoring usually covers more long-term operations and recurring business tasks. Remote workers provide service to the company full-time and function officially as part of the company. 

    Offshoring may be done for the following purposes:

    • Cut down on labor costs
    • Access untapped talent in other locations
    • Scale the company
    • Secure adequate support for the mainland team

    Pros and Cons of Freelancing

    Advantage 1: Access to Special Skills and Expertise

    For companies, one of the main benefits of getting freelancing services is the expertise. You gain access to a wide pool of skilled experts for projects or tasks you need. This access eliminates the need to train or upskill an employee or hire an expert in-house.

    Advantage 2: Gives Companies Flexibility

    Since freelancers work on specific tasks or projects, you need only to hire as needed. A competent freelancer can handle seasonal or unanticipated workload. If one freelancer is hired today, he or she can complete a project within a reasonable timeline.

    Advantage 3: No Overhead Cost

    Freelancers only need an internet connection, which they can set up themselves at no additional cost to your company. Where, how, and when freelancers work will no longer be your concern. Freelancers themselves will find or create a conducive work area. They will also be ready with essential mobile devices. 

    For these reasons, you spend nothing on offices or equipment. You only need to pay for the work done upon completion.

    Disadvantage 1: Inconsistent Quality of Work

    Because of the informality of the freelance industry, the quick turnaround times, and the difficulty of review, the quality of work may vary from freelancer to freelancer. Verifying the skills and knowledge of each freelancer may also be difficult. Qualifications do not necessarily equate to the quality of service you may expect.

    Disadvantage 2: Lack of Formal Structure

    Even with a freelance contract, the relationship between a company and a freelancer is based on trust. There is no formal tie between the two. Because of this, freelancers may withdraw their services before completing a project. When a freelancer unexpectedly withdraws, you are pressured to replace him or her and deal with the unexpected consequences.

    Pros and Cons of Outsourcing

    Advantage 1: Save on Operating Costs

    One of the primary outsourcing benefits, which freelancing does not have, is cost savings. Instead of hiring full-time employees, companies can delegate business operations to third-party service providers or contractors. 

    This move may be practical for limited budgets. After all, budget is a primary factor when deciding to go with outsourcing vs. freelancing for small businesses.

    Advantage 2: Access to Experts

    Outsourcing also brings an accessible talent pool, similar to freelancing. However, what gives outsourcing an edge is that talent may be verified. 

    Outsourcing companies in the Philippines vet and vouch for the skills and knowledge of their team members. You are assured that you get the quality of service you pay for when outsourcing.

    Disadvantage 1: Lack of Company Affinity

    Outsourcing still places considerable distance between a company and the third-party service provider’s workers. This is because the outsourcing company—not the client—manages the employees, who are likely to serve multiple clients.

    Even though an outsourcing professional will do his or her best to understand your business, dedicated employees still have the upper hand in fully understanding your company.

    Disadvantage 2: Very Minimal Control

    Unlike freelancing where you have no control over the freelancer, outsourcing only allows a small amount of control from a company. You can’t urge a service provider to prioritize urgent tasks or processes. You also lack the power to aid an employee’s professional development.

    Differences Between Freelancing and Outsourcing

    FreelancingOutsourcing
    Benefits✅ Access to special skills and expertise 
    ✅ Gives companies flexibility 
    ✅ No overhead 
    ✅ Considerable cost savings 
    ✅ Access to a skilled talent pool
    Drawbacks❎ Inconsistent work quality 
    ❎ Lack of official connection between freelancer and company
    ❎ Little understanding of the company 
    ❎ Company may exercise minimal control only

    With these freelancing and outsourcing differences, outsourcing may appear to be a better choice when compared to freelancing. However, freelancing has its place, depending on the needs of a company.

    Pros and Cons of Offshoring

    Despite the outsourcing advantages and disadvantages compared to freelancing, offshoring may be a more advantageous solution for companies.

    Advantage 1: Save on Labor Costs

    Much like outsourcing, an offshoring strategy can help companies save on costs. The difference lies in the location. Outsourcing companies may also be found in the same country. In contrast, offshoring companies in the Philippines advocate the cost savings that businesses worldwide can gain from.

    The salaries of remote Philippine workers are only a small portion of the salaries of onshore professionals for the same positions. For example, outsourcing accounting work to an onshore company may save you some, but offshoring it will save you much more.

    Advantage 2: More Direct Control

    Because an offshore team forms part of the company itself, one of the benefits of offshore staffing is a high degree of control. 

    You can direct remote workers in the Philippines to prioritize particular tasks. You can rely on them to deal with emergencies or urgent deliverables. You can help them improve in their roles and responsibilities. 

    This way, quality is assured and improved as the project progresses.

    Advantage 3: Operational and Cost Efficiencies

    In turn, direct control and lower labor costs allow for efficiency boosts to operations and cost. A highly skilled workforce continuously learning more skills and knowledge will only increase efficiency over time. 

    Meanwhile, your main team at your headquarters will be able to focus on their core functions. They will work more efficiently since they will not be distracted by non-core tasks.

    Lastly, you acquire skilled talent without the high costs of onshore hiring. Philippine remote workers bring quality work or service without ballooning salaries.

    Advantage 4: Reduced Risk of Loss

    More control for companies and higher efficiency lead to lower risks of loss in business processes. 

    For example, studies showed that digital and analytical business transformations cost large companies around $400 billion. However, offshoring allowed companies to transform with minimal losses. 

    With this, the risk of loss may be avoided entirely if you build an effective offshore team.

    Freelancing vs Outsourcing vs Offshoring

    In sum, check the table below for the offshoring vs freelancer vs outsourcing pros and cons.

    OffshoringOutsourcingFreelancing
    Benefits✅ Cost savings
    ✅ More direct control
    ✅ Efficiency boosts
    ✅ Lower process risks
    ✅ Cost savings 
    ✅ Access to a skilled talent pool
    ✅ Suitable for larger projects or tasks
    ✅ Access to special skills and expertise 
    ✅ Gives companies flexibility 
    ✅ No overhead cost
    Drawbacks❎ Timezone differences
    ❎ Compliance challenges
    ❎ Little understanding of the company 
    ❎ Minimal control over outsourcing workers
    ❎ Inconsistent work quality 
    ❎ No true bond with the company

    Case Study: How Rock Solid Digital Shifted from Freelancing to Reliable Offshoring

    Rock Solid Digital, a web and app development company in Hong Kong, previously employed freelancers for its web development needs. 

    Digital Agency Offshore to Philippines
    Switch from freelancers to offshore talents

    However, the company decided to discontinue getting freelancing services. It found that freelance pricing was too volatile and freelancers weren’t always reliable.

    Due to Rock Solid Digital’s need, it decided to form an offshore team for web and app development. Through offshoring, it teamed up with full-time employees who are more agile and flexible. The company also saves about 80% for each role it offshores.

    Which is the Best Option for You:  Freelancing, Outsourcing, and Offshoring

    Rock Solid Digital’s experience with freelancers vs offshore workers may apply to your business, too. You may have a lot to gain from offshoring. However, your success will all depend on your organization’s needs.

    Although it may be easier to outsource freelance work or offshore entire business processes, you must first evaluate the needs and circumstances of your company. These factors will define your decision of offshoring vs outsourcing vs freelancing.

    It is even possible to leverage all three in a unified strategy. You may start with offshoring as your foundation. It will be your talent and support channel. So, secure team members that will provide continuous support and quality of work. This means that when outsourcing or freelancing is not viable, you will still have offshoring for reliable and essential work.

    Next, outsource any project or task your main or remote team can no longer do. Lastly, freelancers should pick up specific tasks that can be completed during high-demand seasons. They will tie up loose ends.

    Evaluate the Best Talent Acquisition Strategy for Your Company

    From the information above, you may better understand the strengths and weaknesses of different types or practices of talent acquisition. Freelancing and outsourcing are good channels for finding talent in certain circumstances. For general purposes, offshoring is a solid solution for filling in vital roles in your company.

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