Navigating Offshoring: Key Considerations in Today’s Economic Climate

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In today’s globalized economy, businesses often turn to offshoring as a strategic initiative to enhance competitiveness, reduce costs, and access specialized skills. However, amid the ever-evolving economic landscape, the decision to offshore requires careful consideration of various factors to mitigate risks and maximize benefits.

Economic Climate Impact 

The current economic climate plays a pivotal role in shaping offshoring decisions. Factors such as geopolitical stability, currency fluctuations, trade policies, and global economic health directly influence the feasibility and attractiveness of offshoring. Looking Ahead: Offshoring and New-Shoring Trends for 2025 – SRKay Consulting Group Here are key considerations:

  1. Cost Efficiency Offshoring traditionally aims to leverage lower labor costs in offshore destinations, thereby reducing operational expenses. In times of economic uncertainty or downturns, cost efficiency becomes even more critical as businesses seek to maintain profitability and financial resilience.  The Top 4 Benefits of Offshoring for Businesses in 2025 | Reliasourcing However, the current discussions around whether services, in addition to goods, will be hit with tariffs should be taken into consideration.
  2. Risk Management Economic volatility introduces risks that can affect offshoring ventures. Fluctuations in exchange rates, for instance, can impact the cost-effectiveness of offshoring operations. Businesses must implement robust risk management strategies, such as hedging currency exposures or diversifying offshore locations, to mitigate these risks effectively.
  3. Regulatory Environment Changes in regulatory frameworks, both domestically and internationally, can significantly impact offshoring operations. Businesses must stay informed about regulatory developments related to taxation, data privacy, intellectual property rights, and labor laws in offshore jurisdictions to ensure compliance and minimize legal risks.
  4. Supply Chain Resilience The global supply chain disruptions observed in recent years have underscored the importance of resilience and flexibility. What is the future of offshoring? | Supply Chain Dive Offshoring decisions should consider supply chain dynamics, logistical challenges, and the ability to adapt to unforeseen disruptions, such as natural disasters or pandemics, which can affect production timelines and delivery schedules. Measuring dynamic supply chain risks for the offshoring decision in the post‐COVID‐19 era: A longitudinal study – Min – 2024 – Transportation Journal – Wiley Online Library
  5. Technological Integration Advancements in technology, including automation, artificial intelligence, and digital connectivity, are transforming offshoring dynamics. Businesses can leverage these technologies to streamline operations, enhance productivity, and facilitate seamless collaboration across geographies. Integration of these technologies requires careful planning and investment to realize long-term efficiencies.
  6. Strategic Alignment Offshoring decisions should align with broader strategic objectives, such as market expansion, innovation capabilities, and customer satisfaction. Evaluating the strategic fit of offshoring initiatives ensures that they contribute positively to organizational goals and sustainable growth amidst economic fluctuations.

Conclusion

In conclusion, while offshoring offers compelling opportunities for businesses to achieve operational efficiencies and access global talent pools, navigating the complexities of today’s economic climate requires a strategic and informed approach. By considering cost efficiency, risk management strategies, regulatory compliance, supply chain resilience, technological integration, and strategic alignment, businesses can optimize their offshoring initiatives and position themselves for long-term success in a competitive global market.

As businesses continue to adapt to evolving economic conditions, proactive assessment and adaptation of offshoring strategies will be crucial in achieving resilience, agility, and sustainable growth.

 

The Future of Hybrid Work

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I was on a Mediterranean cruise recently where the average age looked to be 75+, the majority of the people were retired and I engaged a few in conversation about the status of work.  The vast majority said that work will be back to the pre-Covid normal within 5 years, meaning that employees will be required to return to the office 5 days/week.  The prediction stunned me as most of the colleagues I speak with, albeit, they are much younger than the cruise crowd, believe that hybrid work is here to stay, myself included.  We believe this is a fundamental shift in the employer/employee relationship that will drive increased flexibility in how and where we work for years to come.

It would seem that we are in good company given that a recent Robert Half survey https://www.weforum.org/agenda/2021/05/hybrid-working-your-office-future
indicated that  one-third of professionals (34%) currently working from home due to COVID-19 would quit if required to be in the office full-time. Nearly half of respondents (49%) said they prefer a hybrid work arrangement, where they can divide their time between the office and another location. Hybrid Work Is Here To Stay. Now What? (Back to Work, Better) (hbr.org)

According to the 2021 Work Trend Index, The Next Great Disruption Is Hybrid Work—Are We Ready? (microsoft.com)over 40 percent of the global workforce considered leaving their employer last year, meaning a thoughtful approach to hybrid work will be critical for attracting and retaining diverse talent. Over 70 percent of workers want flexible remote work options to continue. Employee expectations are changing, and we will need to define productivity much more broadly — inclusive of collaboration, learning, and wellbeing to drive career advancement for every worker, including frontline and knowledge workers, as well as for new graduates and those who are in the workforce today. All this needs to be done with flexibility in when, where, and how people work.”

I could not find supporting data anywhere suggesting that my new cruise friends were correct in their contention that employees would be “required” to return to work in an office 5 days a week.  That got me to thinking about the rate of change and how much some of them have experienced in the last 75-85 years. According to Futurism A Look at How Much Humanity Has Advanced Over the Last 100 Years (futurism.com)

World Literacy Rates

  • 1917: The world literacy rate was only 23%.
  • Today: Depending on estimates, the world literacy rate today is 86.1%.

Travel Time

  • 1917: It took 5 days to get from London to New York; 3.5 months to travel from London to Australia.
  • Today: A nonstop flight gets you from London to New York in a little over 8 hours, and you can fly from London to Australia in about a day, with just one stop.

 

Coca-Cola

  • 1917: On July 1, 1916, Coca-Cola introduced its current formula to the market.
  • Today: Today, Coca-Cola has a market cap of about $178 billion with 2015 net operating revenues over $44 billion. Each day, over 1.9 billion servings of Coca-Cola drinks are enjoyed in more than 200 countries.

Billionaires

  • 1917: John D. Rockefeller became the world’s first billionaire on September 29.
  • Today: There are approximately 1,810 billionaires, and their aggregate net worth is $6.5 trillion. For context, Rockefeller’s net worth in today’s dollars would have been about $340 billion. Bill Gates, the world’s richest man, is worth $84 billion today.

Traffic (Horses to Cars)

  • 1917: In 1912, traffic counts in New York showed more cars than horses for the first time.
  • Today: There were approximately 253 million cars and trucks on U.S. roads in 2015.

Innovation

  • 1917: The major tech invention in 1917? The toggle light switch.
  • Today: The major tech invention of today? CRISPR/Cas9 gene editing technology, which enables us to reprogram life as we know it. And we are making strides in AI, robotics, sensors, networks, synthetic biology, materials science, space exploration and more every day.

Speed Limits

  • 1917: The maximum speed limit in most cities was 10 mph.
  • Today: The maximum speed limit in (or around) most cities is about 70 mph.

So, perhaps rather than a prediction they were making a plea, for the rate of change to slow down, for things to revert back to “the way they used to be”, however unlikely that may be.

The Changing Face of Human Resources

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There has been an earthquake-like shift in the employee-employer relationship and it has happened, not over decades, but within 2 years. It has changed the way employers interact with their employees and the way employees show up for work. In the past, even the advanced HR functions were still primarily transactionally based. This shift has necessitated that employers look at each employee in an authentic Are you an authentic HR leader? (humanresourcesonline.net)way, taking into account their needs on a holistic basis and not just during the workweek. Employees more than ever before are coming to the table with demands. Demands for work/life balance, for enhanced benefits, for more pay, and most importantly, for meaningful work where they can serve a greater purpose and be a part of something bigger than themselves. They are holding employers accountable in record numbers for taking a stand on important issues and being able to eloquently articulate how they are improving the world.  

COVID, while an incredible health travesty, has in some ways, sped up this revolution. It has caused people, employees, to step back and assess what is important to them, where they want to work, how they want to work, and what they are willing to sacrifice, if anything, for a job. In record numbers, over 4.4M in Nov 2021 alone, People Explained Why They Resigned During The Great Resignation, And Their Points Are Sooo Valid (yahoo.com)employees are quitting and quitting without necessarily having another position lined up. Quitting to pursue their passions and their interests and realizing that money is only a part of the equation to leading a happy life. The term The Great Resignation, Great Resignation – Wikipedia coined by Anthony Klotz, a professor of management at Mays Business School at Texas A&M University, who predicted the mass exodus in May 2021, is on everyone’s minds.

I feel very fortunate to be a part of an organization that started this journey long before the world had ever heard of COVID, to have embraced our WHY, and to have established inspirational Guiding Principles that serve as a daily roadmap for our teams for how we want to serve our employees, our residents and our broader communities. Well-being has always been at the forefront of our message and wellbeing in the broader sense of the word, incorporating physical, financial, social, emotional, and career wellbeing. As a people-first company, we continue to take the individual needs of our workforce into account, personalizing our offerings and doing what is right.

While the staggering numbers of employees who are quitting their jobs and moving on may slow in the coming months, the seismic shifts surrounding flexibility and employee demands that have occurred will remain. I am frequently asked by our employees and others if we will revert to the old ways of working without the flexibility and the hybrid The Next Great Disruption Is Hybrid Work—Are We Ready? (microsoft.com)schedules. My answer is always the same “No”. Once we enter a period of enlightenment it is impossible not to know what we know. People can be highly productive working from someplace other than the office, working irregular hours and days, and can be trusted to get the job done, whether you can “see” them or not.

Augmented Reality for Management Development Training

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In this day of consumerization of personalization, employees are not looking for a one size fits all approach any longer, but for learning and development opportunities that are specific to their needs.  Augmented reality is a unique way to supplement your existing e-learning content and to engage your employees in the Learning and Development journey.  Using Augmented Reality For Hands-On Training (forbes.com)

Augmented reality (AR) is an interactive experience of a real-world environment where the objects that reside in the real world are enhanced by computer-generated information. AR can be defined as a system that incorporates three basic features: a combination of real and virtual worlds, real-time interaction, and accurate 3D registration of virtual and real objects.

For organizations looking to implement the next level of training, Augmented Reality or AR-based training is quickly cementing itself as the technology of choice. How Augmented Reality Is Changing the Training Industry (trainingmag.com) Augmented Reality training in a corporate setting is the ideology of bringing training to life by animating daily objects and scenarios that an employee interacts and engages with. 

Experts agree that for a behavior change to take place, learners must remain engaged throughout training. This is an ongoing challenge in L&D. Whether it be in a classroom or an eLearning course, with all of today’s distractions it is often difficult to grab and hold the attention of learners. E-mails are pinging, phones are ringing, text messages are coming in, all of which seem to demand immediate attention.

Another challenge can be providing learners with experiential learning opportunities, where they are actually able to interact or practice with whatever they are learning. When learning is engaging and experiential like this, the knowledge retention of learners increases dramatically. In addition, when learners are placed in an environment where they are “pulling” content through their own discovery versus being “pushed” content, that feeling of control can also result in much higher knowledge retention. Higher retention is critical to achieving behavior changes.

Printed learning materials can be brought to life by taking something static and creating animation and interactivity that engages the learner and demonstrates perspectives that simply can’t be shown with something static. Group activities can be transformed into interactive experiences that get the learners up and moving and working together as they scan various items to solve clues and obtain new knowledge along the way.

For example, a training app for a forklift may ask the user to sit down and aim their device camera downwards, and their screen will light up with virtual pedals next to their feet and driving controls above their knees.  This allows the user to practice in a safe environment, without any of the real-world risks.  Augmented Reality Training: Benefits, Types, Use Cases | Program-Ace Multiple people could be trained simultaneously without having to give up forklifts for production.

Augmented reality is a promising technology with a strong future in eLearning and especially for corporate training.

Reimagining Recruitment

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Being unable to hire qualified workers is the most critical and widespread challenge businesses face today in the post-pandemic world.  Businesses that don’t have enough employees are forced to reduce their hours, scale down operations, and in some cases, permanently close, all leading to a less than rosy economic recovery.  

In a recent Committee to Unleash Prosperity paper CTUP_BonusUnemploymentBenefitsLaborShortage.pdf (committeetounleashprosperity.com) by Casey Mulligan, a professor of economics at the University of Chicago, who served as chief economist at the White House Council of Economic Advisers, the latest monthly jobs report from the Department of Labor for April and May have shown disappointing employment increases, flat job participation rates, and a slight increase in the number of Americans collecting unemployment benefits.  Two weeks before the May jobs survey, the BLS counted 9.3 million unfilled jobs in America, even with more than nine million Americans “unemployed.” The 9.3 million unfilled jobs is almost 2 million beyond the pre-pandemic record for the U.S., and the policy riddle is why more unemployed workers are not getting back in jobs. Small business owners around the country—construction firms, restaurants, bars, retailers, hospitals, and factories—are complaining that workers they want to rehire are less likely to work now. According to the U.S. Chamber of Commerce, some nine of 10 small employers are citing a shortage of workers as a top concern. 

Back in March, Congress and President Biden enacted the $1.9 trillion American Rescue Plan. H.R.1319 – 117th Congress (2021-2022): American Rescue Plan Act of 2021 | Congress.gov | Library of Congress

Because of the $300-a-week bonus unemployment benefits enacted in March 2021, along with other expansions of welfare benefits and cash payments unrelated to work:

  • In 21 states and DC, households can receive a wage equivalent of $25 an hour in benefits 
    • with no one working. 
  • In 19 states, benefits are equivalent to $100,000 a year in salary for a family of four with 
  • two unemployed parents.
  • In all but two of the blue states, $300 Supplemental Unemployment Insurance benefits 

plus other welfare pay more than the wage equivalent of a $15 minimum wage

There are 1.4 available workers per job opening in the US. This rate is just half the average of the past 20 years

Clearly, corporations are going to need to woo these workers back to work.  According to Jennifer Shappley,  Jennifer Shappley | LinkedIn the vice president of global talent acquisition at LinkedIn, the key to success in fighting the war for talent, is for corporations to offer flexibility to their employees. 

Forward-thinking companies recognize that employees, just like consumers, are attracted to different types of flexibility.  The below are some ways you might consider enticing your prospective employees and current workforce back to the office

  • Offer a hybrid model where they work 2-3 days in the office and the remaining days in an alternate location
  • Create more inclusive job advertisements. Job listings referring to “responsibilities” rather than “requirements “. LinkedIn finds a 14% increase in candidates when job posts mention responsibilities, but not requirements
  • Consider whether a 4- year bachelor’s degree is necessary.  LinkedIn reports a 20% increase in managers hired who didn’t possess a traditional four-year degree.
  • Be empathetic and concerned about your employee’s mental health- allow sick days to be used for “wellness days”
  • Re-imagine the workplace to be warm and inviting
  • Create informal areas where employees can collaborate with each other
  • Sponsor afternoon events where employees can enjoy a glass of wine and each other’s company

At the end of the day, monetary compensation is only one reason why employees work.   Help your employees to balance their work and personal lives, provide a comfortable and relaxing work environment and allow them responsibilities where they feel fulfilled at the end of the day and you will attract the candidates you need!