How Offshoring Enables Mid-Market Businesses to Scale

Mid-market companies are a crucial part of the U.S. economy, making up one-third of the U.S. economy and accounting for one-third of employment. However, the U.S. has been struggling with a significant talent shortage crisis in recent years, and mid-market businesses are being hit particularly hard. One strategy that mid-market businesses use to overcome the effects of talent shortage is outsourced offshoring to find top talent.

Challenges of Talent Shortages for Mid-Market Firms

Mid-market businesses are facing significant challenges in attracting, retaining, and developing the skilled talent needed to drive growth and innovation.

Mid-market companies often struggle to attract top talent, as they lack the brand recognition and resources of larger corporations. They have a smaller reach and need help standing out in a competitive job market.

Mid-market firms find themselves competing against enterprises for an increasingly tight supply of skilled workers. They lack the resources and reputation that larger companies have built to entice top talent.

Unlike larger corporations, mid-market companies may not have the financial resources to invest in extensive employee training and development programs. This makes it difficult to attract top talent seeking opportunities for growth and advancement.

The talent shortage is particularly acute in certain mid-market industries. Nearly half (49%) of the mid-market healthcare industry has reported a negative impact due to talent shortage, with construction and service firms coming in just behind at 46%.

Specific examples of talent gaps in mid-market companies include a shortage of skilled software developers, healthcare workers like physician assistants, and employees with critical soft skills like leadership and problem-solving. A recent survey commissioned by RSM found that existing workers are being burned out, creating a vicious cycle of employee burnout and turnover.

Consequences of Talent Shortages

Talent shortage creates a cascade of negative consequences for companies, from higher costs to reduced innovation and poor customer experience. Addressing these shortages should be a top priority for business leaders.

Talent shortages lead to higher costs in several ways:

• Increased Recruiting and Hiring Expenses
  • Companies must invest more in recruiting, headhunting, and extensive interview processes to find qualified candidates in a tight labor market.
• Higher Salaries
  • Companies must offer higher salaries and more competitive compensation packages to attract scarce talent.
• Onboarding and Training Costs
  • With fewer experienced hires available, companies must invest more in onboarding and training new employees to get them up to speed.
• Overtime Pay
  • Existing employees must work longer hours and take on extra responsibilities, leading to increased overtime pay.

These higher costs are compounded by reduced productivity, as open positions remain unfilled and overworked employees struggle to keep up. This creates a vicious cycle of higher costs and lower output.

How Offshoring Can Help Mid-Market Businesses Scale

Offshoring is the transfer of business processes to another country for lower costs or access to specialized skills. It helps companies reduce operational costs, increase efficiency, and tap into a global talent pool.

A recent study by Manpower Group indicated that over half (55%) of employers are willing to hire internationally as hiring demand continues despite growing talent scarcity. Common offshored functions include IT, software development, manufacturing, and customer service.

Offshoring allows mid-market companies to tap into a global pool of top talent at a lower cost compared to hiring locally.

For example, a software developer in the Philippines earns an average salary of $17,579, compared to $122,478 for a US-based developer. This significant cost difference enables mid-market firms to expand their workforce without incurring high overhead costs.

Scaling a business requires substantial investment in recruitment, office space, and infrastructure. Offshoring partners can handle these functions, allowing mid-market companies to reinvest their savings into other core areas of the business. This makes it easier to scale operations and enter new markets.

Having an offshore team in a different time zone enables mid-market companies to provide 24/7 customer support. This can lead to higher customer satisfaction and sales, as clients receive immediate assistance regardless of the time of day. For example, a US-based company with an offshore team in the Philippines can offer round-the-clock service.

Offshoring can streamline workflows and improve operational efficiency. When processes are well-defined and documented, an offshore team can take over repetitive tasks, freeing in-house staff to focus on higher-value work. This allows mid-market firms to optimize their operations and scale more effectively.

Through offshoring, mid-market companies can access specialized skills and expertise that may be difficult to find locally. Offshore providers often have a deep talent pool in software development, accounting, and digital marketing. This allows mid-market firms to build specialized teams to support their growth.

Offshoring allows mid-market businesses to scale operations, reduce costs, improve efficiency, and access a wider talent pool. By partnering with an experienced offshore provider, they can overcome hiring challenges and focus on their core competencies to drive growth.

Originally published at iSupportWorldwide

https://isupportworldwide.com/how-offshoring-enables-mid-market-businesses-to-scale/