Providing SMBs with an Onshore Alternative

The trend toward offshoring business services jobs in the United States is not going away anytime soon, and will in fact accelerate during the next few years. This is the main finding of a new study from The Hackett Group, which indicates that businesses based in both the United States and Europe will shed almost 4 million services jobs relating to IT, finance, procurement and HR by 2016. Offshoring to lower-cost geographical locations saves companies significant costs in labor, real estate and operations.

However, mostly large enterprises engage in offshoring. The study indicates that most of the lost jobs will come from big companies, as smaller enterprises are less likely to offshore. SMBs tend to gain less from offshoring because they have a harder time accommodating the initial transitional costs of an offshoring arrangement, cannot obtain the same economies of scale as a larger company and often do not have the proper telecommunications infrastructure necessary to maintain contact with and control of an offshore delivery center that may be 5,000 miles away.

So as with so many other business trends, offshoring allows the rich to get richer while the smaller players fall even further behind. But it doesn’t have to be this way.

MSPs Can ‘Onshore’ SMB Services

In recent years, “onshoring” has developed as a counter-trend to offshoring, where companies still send IT and business processes out of house, but do so with domestically based providers. In the case of SMBs, MSPs are in an excellent position to “onshore” many of their activities. Managed services can supplement or take the place of internal IT staff and infrastructure, and also be used to provide IT services to external customers.

In addition, MSPs can develop managed services that allow SMBs to cost-effectively perform tasks relating to HR, procurement, finance and other key areas of the business by using sophisticated software programs that otherwise might be too complex or costly to host in-house. This allows SMBs to keep staffing to a minimum and eliminate costly middle management positions, all while avoiding the headache of implementing or maintaining systems.

MSPs should present their SMB customers with information on how their larger competitors are using offshoring to gain an even greater cost and efficiency advantage, and then explain how MSPs can provide many of the same benefits to smaller enterprises. Offshoring may not be going away, but it does not have to prove to be yet another competitive disadvantage for SMBs.