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5 Ways Hiring Offshore Labor Can Help Your Startup Survive

 

  Written By David Landau

Starting a business is difficult. Startups can easily find themselves running light on cash, short on time, and with limited options. Many don’t make it, and those who do have a long road to success. 

If you’re an executive or founder of a new business that’s in a tough spot, using offshore labor can help your startup –

    • Reduce Expenses
    • Increase Revenue
    • Find Qualified Employees
    • Practice Good Management
    • Focus More on Data

 

Business Startups Today

Covid has been an absolute boon for startups in the United States. In July 2020, the Census Bureau recorded nearly 550,000 new business applications, up from 300,000 just six months earlier, marking an extraordinary increase of 83%. This new wave of activity appears to be sustained. Even in September of 2023, there were nearly 475,000 new business applications.1

Whether due to Covid government subsidies, a rise in self-employment, or an increase in telecommuting, since 2020, the number of startup businesses has increased substantially.

Despite this increase in activity, the success rate of startups is regrettably low. In 2023, it was reported that 20% of businesses did not survive their first year. By year two, 30% of businesses had failed. By year three, 50% of businesses had shut down. By year five, 60% of new businesses were no longer active.2

In the face of such long odds, many struggling startups find themselves searching for a way out of their problems. Fortunately, hiring offshore labor can help.

Here are five ways that hiring offshore labor can help your startup survive.

 

1. Hiring Offshore Labor Can Help a Startup Reduce Expenses

Any business owner or CEO would love to reduce their business’s expenses, but for startups already running on a limited budget, keeping costs down is vital to their success.

In 2023 it was found that 82% of businesses had closed down due to cash flow problems.3 Undoubtedly many business owners and CEOs ask themselves at one point or another how to increase cash flow. Working to reduce business expenses is a great way to start.

Payroll expenses can make up anywhere from 15% to more than 50% of a business’s expenditures.4 For US-based businesses, keeping labor expenses down is only going to get more challenging in the coming years. In 2022, the US saw an annual inflation rate of more than 8%, and workers today are demanding that their wages increase to keep pace.5 Things get even worse at the state level. In March of 2024, California increased wages for fast food workers to $20 per hour.6 Fast food wages have long been seen as the de facto wage floor, and the Golden State now has a de facto minimum wage that is nearly three times the Federal minimum wage.

Given how much of a burden payroll expenses can be, any business should strive to keep them down. By using offshore labor, a business can potentially cut its payroll expenses by up to 90%. Sales representatives, virtual assistants, tech support, marketing and advertising employees, accountants, and data analysts can all be hired for significantly less by using offshore labor. Money that has been saved can be reinvested back into the company to manage other priorities, bring on more employees, increase revenues, build cash flow, and survive.

2. Hiring Offshore Labor Can Help a Startup Increase Revenue

Every business founder or CEO wants their business to bring in more revenue. Given how many startups run into problems with cash flow, increasing revenues is even more important for new businesses.

Failed products due to poor marketing are all too common and have brought down many startups. Creating a good marketing campaign in an era of endless content and advertisements requires many qualified and experienced employees. More than just marketing and advertising professionals, good marketing requires employees skilled in graphic design, multimedia, and content creation, and the ability to create high-quality content consistently. For a startup already low on funds, bringing in the right kind of employees who can create a good marketing campaign gets even more difficult. In the US, marketing and advertising employees can cost upwards of $50,000 per year. Offshore labor can provide a startup with access to these professionals for approximately 20% of their American competitors.

Beyond just marketing, managing customer relationships is just as vital for building revenues. Customer relationship management (CRM) technologies including HubSpot and Salesforce have become the backbone of revenue generation in the business world today. Working with these new technologies requires qualified staff and employees and a dedicated sales team to put them to their best use. By using offshore labor, a business can have access to employees who can make the most of available technology and work with customers to generate revenues, all for significantly less than their American counterparts. 

Neither marketing nor sales alone can make up for maintaining an ongoing and healthy relationship with customers. New customers may turn down a product if they can’t find the support they need, and old customers may turn away if they are unable to get reliable service. Having a 24/7 customer support staff can provide that reliable service that startups need to reach new customers and help old ones. Unfortunately, 24/7 support in the US is expensive and logistically challenging, but using offshore labor can help. Customer support staff can be placed strategically in different time zones, and reduced labor fees mean that more employees can be hired or kept on the clock for longer.

3. Hiring Offshore Labor Can Help a Startup Find Qualified Employees

Running low on funds and light on influence, startups can find themselves unable to bring in the employees they need to get off the ground. 80% of small businesses find themselves unable to find qualified staff but using offshore labor can help.7

Offshore labor was once seen as the realm of low-skilled labor, but increasing levels of education around the world have helped create a highly skilled workforce outside of the United States. Globally, the population of individuals with a post-secondary level of education went from approximately 800 million in 2015 to 930 million in 2020.8 Much of this is thanks to the availability of high-quality but highly affordable education. A PhD program in the Philippines can cost a student just $1,500 per semester in tuition, relative to the tens of thousands of dollars that a student would need to pay in the United States. 

However, students are no longer limited to their local universities thanks to the rise of remote learning technologies. Students who are qualified to go to the most elite colleges in the world can get there without ever leaving their homes and completing their entire degree online. Cheaper education is readily available outside of the United States, but education at some of the finest colleges on the planet is now available to anyone anywhere.

Despite the growth in expertise that is happening around the world, many business owners are still unsure about how to tap into it. Education outside of the United States can be difficult to understand, and the quality of a potential employee can be tough to gauge. Offshore staffing agencies can help. By using rigorous testing and screening practices, a startup can be connected with the employees they need without having to worry about the logistical challenges of vetting candidates in another country. Offshore staffing agencies can help any business find that diamond in the rough.

4. Hiring Offshore Labor Can Help a Startup Practice Good Management

Bad management is bad for any business, especially startups. The founders and executives of startups frequently find themselves bogged down in menial tasks, forced to micromanage employees, unable to efficiently allocate the workload, and incapable of focusing on the big picture. Even worse, an overworked executive can easily lead to overworked employees. Offshore labor can help. 

A business can hire a qualified offshore virtual assistant for approximately $18,000 per year compared to approximately $60,000 per year for a US-based virtual assistant. A virtual assistant can provide administrative support, streamline the workload, help delegate tasks, manage deadlines, assist with communications, and prevent executives and managers from micromanaging employees. Given the reduction in expenses, a business can potentially afford to hire two virtual assistants for the price of one.

With a streamlined workload, better task delegation, and better deadline management, employees will no longer be so overburdened, and executives can shift their priorities. The focus changes from the small tasks to the bigger and more important ones. The founders and executives of a startup can now figure out how to bring in new revenue, build the business, and succeed.

5. Hiring Offshore Labor Can Help Startups Focus More on Data

The founders and CEOs of many startups don’t make data analysis a priority, simply because few feel they have the time, but you can’t drive a startup forward without quality data analysis. Without the insights provided by effective data analysis, the success of a startup is anything but certain. Fortunately, even for a startup with a limited budget, using offshore labor can help any business make the most out of its data.

By bringing in qualified professionals who are experienced with data entry and analysis, a startup can make the right decisions that reap the highest rewards. A startup can use data to focus on their ideal customer base and employ the best strategies that yield the maximum reward with the minimum expenditure of resources, and expand into new markets as well, helping to increase revenues. Using data analysis, a startup can streamline its operations, track supplier performance, and pick the ideal partners to reduce its expenses while increasing revenues. Startups can even plan for the future by forecasting demand for their goods and services and taking the best course of action to ensure their success.

Qualified professionals who are experienced with data entry and analysis are hard to find. An experienced data analyst can cost a startup over $100,000 a year, which, in spite of the countless benefits, is out of the reach of many new businesses. Fortunately for even the most cost-conscious of startups, an offshore data analyst can be hired for approximately $30,000 to $40,000 per year.

The Bottom Line

Startups struggle to survive, and the data proves it. Many are looking for any way they can to succeed. By using offshore labor, startups can reduce expenses, increase revenues, hire qualified employees, practice good management, and get the most out of data.

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