Offshoring doesn't mean job losses back home

When most people hear that a company is offshoring some of its operations their first response is naturally "will I lose my job?" and the answer was most likely "yes". Offshoring was simply replacing local domestic workers with lower-cost labor somewhere else, so of course their job was going to disappear, right?

Business meeting

In reality there is just as much of a chance that domestic employees don't lose their job and could be re-skilled and relocated within the organization for several good reasons.

Skill enhancement, specialization and knowledge sharing

It takes years for an organization to accrue skill, talent and knowledge - let's call it intellectual capital - and while you can offshore the manual labor involved in a process fairly easily it is much harder to export all that intellectual capital. This is why domestic employees tend to shift from transactional to subject-matter expert positions where they can share knowledge, support training and development, and act as escalation points for the offshore team.

Alternatively, employees who are a great culture fit for the company but whose role isn't easily redefined can be up-skilled or re-skilled and assigned to other parts of the organization where they can continue to contribute and add value.

Focus on the core & strategy

Taking non-core and ancillary functions offshore has the benefit of allowing the organization to focus on what it does best (it's core business) and strategy (what's next). Often times these functions get less attention and resources than they should because the non-core functions can be noisy and demanding.

With offshoring, skilled employees can now redirect their efforts to high-value activities and strategic initiatives, potentially leading to increased innovation and job creation domestically.

Cost efficiency and savings supports domestic research & development

Another business function often under-funded and under-resourced is research & development, particularly during tough economic times. Offshoring can generate significant cost-savings that can be redistributed across the organization to areas like R&D where experienced employees can contribute to innovation, product and service development, and business expansion efforts.

Business expansion and growth

All of the activities mentioned above can have the consequence of helping the business grow and expand in new ways, creating new markets, accessing new territories and growing their market share.

Inevitably this leads to the expansion of domestic resources necessary to support these growth initiatives, and existing employees tend to be absorbed and redistributed as a positive consequence.

Conclusion

Offshoring doesn't always mean job losses, and in many cases can actually lead to new job creation depending on how the business leverages the cost-savings gained by offshoring. If the company wants savings to go to the bottom-line then nothing can stop redundancy and retrenchment from happening. But if offshoring is done as a growth initiative and as a way to allow the business to expand without directly increasing its costs, then there will be opportunities for valued employees regardless of what gets offshored and what stays in-house.