Wonderlabs Blog

4 Reasons to Offshore (Immediately)

Posted by Keith Tan on Oct 3, 2016 10:41:00 AM

Distributed teams may be THE solution in this economic climate.

I've been talking to other executives of startups and everyone seems to be in a glum mood. Ask them why, and they'll tell you that they've got a lot on their mind: hiring costs, trouble finding the right people and difficulties managing the people they do hire.

I used to face these problems back when I was based solely in Singapore as well and I think it's important to tell you just how much easier life can be when you're offshoring:

1. The fragile economy

Fragile.jpgWe’ve seen the dismal growth figures of 2016 — just under 2% in Singapore. Although 2
016 Q4 figures suggest an economic rebound, it was actually just a lifeboat that kept us afloat from a recession. 

The risks haven’t dissipated yet, given the new US administration. In times like these, you have to cut costs — everything you can do cheaper, do cheaper, because your bottom line depends on it. This means manpower, goods, logistics — everything. (This also applies when times are good, but is especially important to remember during tough times).

2. Hiring isn’t getting easier

Since you’ve probably been through the pain of hiring, you’ll know exactly what I’m talking about here. Really talented people are hard to come by and snagging them can be like looking for a needle in a haystack.

Your search will also cost you money, time and opportunity. All these costs come up to about 23% of his first year’s salary. Let's say you're paying him $30,000 annually — the cost of finding him comes up to around $6,000. And that's not even taking into account.

High Cost.jpg

3. Associated costs

An employee’s cost is not just the value of his salary — in fact, the average employee can cost as much as two times his salary. So your new hire is taking home $30,000 in wages, but also an additional $25,000 of associated costs, which include insurance, overtime pay, paid leave and of course, CPF.

That works out to:

$30,000 + $25,000 + $6,000 = $61,000

Can you really afford that in this economic climate? When you offshore, your costs are fixed and visible. $30,000 is $30,000 — not $61,000.

Simpler Team.jpg

4. Simpler teams

Each new hire brings something new to your team and culture. Expect more differences of opinions, clashes over working styles, disagreements over management methods — this is the type of drama and complexity you don’t need, because it saps energy, resources and time. In fact, CPP Inc found that US employees spent an average of 2.8 hours a week managing conflict — time which could be spent maximising your productivity.

Offshoring with Distributed Teams means that you don’t have to worry about any of this, while getting the most bang for your buck. It also allows you to get rid of management bureaucracy that you won’t need anymore, saving you even more every month.
But that being said, offshoring isn’t for everyone. Here are four things to ask yourself before exploring further:

    1. Can the work be done virtually?
    2. Is there a need for continuous interaction within the team?
    3. Is it a tech-driven industry, like software engineering or creative design?
    4. Is it something that your management team has significant expertise in?
If you answered No to any of them, then offshoring probably isn’t for you.
But if you answered yes to any of them, you should check us out at www.wonderlabs.io.  We can help you hire top software engineers and designers, cut your costs by at least 30% and eliminate your management headaches.

Topics: Insider