If you are considering offshoring to reduce operation costs and still have experts handle tasks for your company, you are in the right place.
We listed 17 real-world offshoring examples from companies that soared to success and those that stumbled. You will discover the strategies they did right and learn what mistakes to avoid.
Let’s begin.
Offshoring Lessons in a Nutshell: What to Do & What to Avoid
Offshoring can make everyday operations easy for you, but it also comes with challenges. This table lists practical suggestions to keep your risks in check and ensure smooth operations.
| What to Do | What to Avoid |
| Pick an offshore partner that already handled projects similar to yours. | Choosing an offshore partner based solely on cost. |
| Conduct monthly audits and randomized checks for quality control. | Not having clear communication channels that cause misalignment and project failures. |
| Conduct monthly operation reviews to address issues promptly. | Expanding offshore operations too quickly stretches resources thin. |
| Prepare backup plans for each risk to manage potential impacts. | Partnering with an offshore provider without checking their financial stability. |
| Use project management tools to collaborate better. | Ignoring the advice of local experts who understand the offshore market better. |
11 Successful Offshoring Examples
Consider these noteworthy offshoring success stories to identify specific tasks to implement, spot your business blockers, and learn how to overcome them.
1. Slack (Communication Software)
Slack is a leading workplace communication tool where you can chat, share files, and work together smoothly. It has over 12 million daily users and 156,000 organizations using it.
Why They Outsourced: Slack outsourced specialized technical skills in software development and customer support. They used cost-effective tech talent from Eastern Europe and Southeast Asia to scale operations and manage costs.
What They Outsourced: Software engineering tasks, integration development, and customer support.
How They Were Successful: Slack developed new features faster and made the platform more stable so it can grow quicker and get a larger market share.
Practical Lessons You Can Apply:
- Find the skill gaps in your local team that experts from other countries can fill.
- Start with an easy project to help offshore teams blend into your operations smoothly.
- Set up communication and project rules to align offshore teams with your business goals and quality standards.
2. ZocDoc (Healthcare)
Zocdoc is a digital medical care platform with 6 million monthly patients. You can book doctor appointments online and connect to various medical practitioners with it.
Why They Outsourced: Zocdoc outsourced customer support centers in the Philippines and South America to offer extended support hours to their users in the United States without the need for a 24/7 workforce domestically.
What They Outsourced: Customer service, IT development roles, and back-office tasks.
How They Were Successful: Zocdoc’s 24/7 support to help users book emergency appointments or solve issues. This support reassured users and felt secure using the service.
Practical Lessons You Can Apply:
- Focus on outsourcing non-core activities to dedicate more resources to areas that directly enhance customer value and service quality.
- Review the quality of work provided by offshore teams monthly to make sure it meets your standards and adjust strategies as necessary.
3. Adore Me (Retail & eCommerce)
Adore Me is an online lingerie retailer where customers can sign up to receive new products regularly at a discount. Adore Me has shipped over 11 million products.
Why They Outsourced: Adore Me outsourced manufacturing in China, Bangladesh, and Vietnam to cut labor costs. They also wanted to take advantage of the advanced manufacturing technologies available in these countries.
What They Outsourced: Customer service, IT development tasks, and manufacturing & logistics operations.
How They Were Successful: Adore Me sold their items at affordable prices but still made a good profit.
Practical Lessons You Can Apply:
- Outsource to regions where it costs less to operate. You can use those savings to focus on developing new products and expanding your business.
- Use the latest manufacturing tech from abroad to make your products. This ensures your products meet high standards.
4. Revolut (Financial Services)
Revolut is a fintech company that offers currency exchange, sends money transfers abroad, and sets up savings accounts. It has over 25 million customers worldwide.
Why They Outsourced: Revolut outsourced to grow their business. They wanted to adapt to different markets with different laws, customer service needs, and languages.
What They Outsourced: Customer support, IT development, and data security & compliance.
How They Were Successful: Revolut scaled its operations based on business needs. They expanded into new markets without the expense of hiring permanent in-house staff.
Practical Lessons You Can Apply:
- Consider outsourcing customer support and IT development. This helps you adjust to new market demands without the large costs of permanent staff.
- Match your services to meet the laws, languages, and customer expectations in each market you enter. You can gain loyal local customers.
5. AppSumo (eCommerce)
AppSumo is an eCommerce platform for software, eBooks, and courses. Their users are entrepreneurs and small to medium-sized businesses. The platform served over 1 million customers since it started.
Why They Outsourced: AppSumo outsourced to support their current team during the busy seasons. They also wanted to reduce the cost of hiring permanent staff during these times.
What They Outsourced: Customer support, web development & IT tasks, and content creation.
How They Were Successful: AppSumo easily adjusted the number of workers in customer support and content production based on what the business needed to help them save labor costs.
Practical Lessons You Can Apply:
- Outsource teams to test and understand new markets without paying high labor costs. This opens the door to expansion.
- Prepare for busy periods by using outsourced help to support your core team so you handle increased demand without overstressing your staff.
6. Thinx (Apparel)
Thinx designs and sells underwear that can absorb menstrual flow and can be used instead of or along with other period products. As of 2023, the company has 1 million product users.
Why They Outsourced: Thinx outsourced to produce high-quality products with lower labor costs.
What They Outsourced: Manufacturing, quality control processes, and supply chain logistics.
How They Were Successful: They kept their production expenses down. They provided lower pricing for consumers without compromising on quality.
Practical Lessons You Can Apply:
- Pick outsourcing partners who have a proven track record. Use online reviews, case studies, and testimonials to gather initial information.
- Keep communication lines open daily to align expectations, timelines, and product quality.
- Set up quality assurance at all stages of production to meet high product standards.
7. Klarna (Financial Services)
Klarna is a fintech company that offers online direct payments, pay-after-delivery, and installment plans in the eCommerce space. As of 2023, they help over 147 million consumers and 400,000 merchants all over the world.
Why They Outsourced: Klarna outsourced to get the best experts in payment security and operations. They also wanted to adjust their workforce size as needed to avoid the extra costs of hiring and training.
What They Outsourced: Customer support services, IT & software development, and data processing & analysis.
How They Were Successful: Klarna expanded their operations and handled more customers without lowering service quality.
Practical Lessons You Can Apply:
- Partner with outsourcing companies to look for reliable international talent. Check their track records. You can look for previous clients and ask for reviews.
- Keep high service quality to retain customers and build trust in your brand.
8. TransferWise (now Wise) (Financial Services)
Wise, formerly known as TransferWise, is a fintech company that provides an easy way to transfer money internationally and exchange currencies online. They focus on keeping costs low and being upfront about fees. As of 2023, Wise has over 13 million customers worldwide.
Why They Outsourced: Wise outsourced to lower costs and allow them to offer their users low fees. They also wanted to respond fast to customer inquiries.
What They Outsourced: Customer support, IT development, back-office functions, and compliance operations.
How They Were Successful: Wise reduced its overhead costs and offered low fees and good exchange rates. They also provided 24/7 help and addressed any customer problems.
Practical Lessons You Can Apply:
- Hire expert talent from places with lower labor costs to help keep your products and services prices down.
- Set up customer service centers in various time zones so your customers can get help whenever they need it.
9. Zapier (Workflow Automation)
Zapier is an online tool that helps you automate tasks between different web services without the need for coding skills. The platform supports over 3,000 apps.
Why They Outsourced: Zapier outsourced to focus on improving their product and service.
What They Outsourced: Customer support, software development, and testing & quality assurance.
How They Were Successful: Zapier improved their automation tools and grew the business to reach over 3 million users.
Practical Lessons You Can Apply:
- Outsource non-core activities so your team can focus on important projects that help your business grow.
- Conduct tests to assess your product or service’s performance and identify areas for improvement that offshore teams can handle.
10. HelloFresh (Food & Beverage)
HelloFresh is a meal kit delivery service. It provides pre-portioned ingredients and recipes, delivering them directly to customers’ doors. As of 2023, they delivered over 600 million meals to more than 7 million people around the world.
Why They Outsourced: HelloFresh outsourced to manage the logistics of fresh ingredients efficiently.
What They Outsourced: Supply chain management & logistics, customer support, and IT & data analysis.
How They Were Successful: HelloFresh delivered fresh ingredients with no quality issues. They also stored fruits and vegetables well and reduced waste.
Practical Lessons You Can Apply:
- Implement quality checks daily to make sure your products or services meet high standards before they reach your customers.
- Look for ways to minimize waste in your operations to cut costs and appeal to eco-conscious consumers.
11. ASOS (Retail & eCommerce)
ASOS is a British online fashion and cosmetic retailer of clothing, accessories, and beauty products from over 850 brands. They have over 26.1 million active customers.
Why They Outsourced: ASOS outsourced to manage inventory. They also wanted to deliver products without delays across different regions.
What They Outsourced: IT development, customer support, logistics, and data processing & analytics.
How They Were Successful: ASOS organized a more efficient global shipping system. Products were delivered to customers worldwide without delays.
Practical Lessons You Can Apply:
- Use the latest technology like Cloud Storage to let your team around the world share and update data easily.
- Train offshore teams to understand the brand and culture of different markets to ensure a consistent brand experience.
7 Failed Offshoring Examples
Unfortunately, offshoring also has its share of pitfalls. But you don’t have to learn that the hard way. Identify and learn from the mistakes that these companies made.
1. Homejoy (Home Services)
Homejoy was an online platform that connected homeowners with local residential cleaners. They served over 1 million homes before closing down in 2015.
Why They Outsourced: Homejoy outsourced to get affordable customer service and IT support. The savings will help them to expand to more cities and countries.
What They Outsourced: Customer support, IT operations, web maintenance and development.
How They Failed: Their offshore customer service teams didn’t have consistent skills and commitment. This caused service problems that affected customer loyalty and brand image.
Practical Lessons You Can Apply:
- Set up strong quality control measures to make sure services are consistent for all teams.
- Implement monthly performance reviews. Make sure offshore teams meet your business standards and maintain quality across services.
- Provide training for your offshore teams to align them closely with your company’s values, processes, and customer service expectations.
2. Solyndra (Renewable Energy)
Solyndra was a company that made solar panels in a unique cylindrical shape to absorb sunlight from all angles. They received a $535 million loan guarantee from the US Department of Energy in 2009 but filed for bankruptcy in 2011.
Why They Outsourced: Solyndra outsourced to reduce manufacturing costs. They also wanted to scale up their production.
What They Outsourced: Solyndra outsourced the production of its solar panels.
How They Failed: Solyndra’s cylindrical technology did not adapt well to the standardized processes used by their outsourcing partners causing quality control issues.
Practical Lessons You Can Apply:
- Conduct a risk assessment before outsourcing to understand potential challenges and to plan accordingly.
- Maintain strict quality control with outsourced processes and products used to make sure they meet your standards and are compatible with your offers.
3. Bluegogo (Transportation)
Bluegogo was a Chinese bicycle-sharing company known for its system that allowed users to unlock and rent bicycles through a smartphone app. At its peak, Bluegogo had over 20 million users.
Why They Outsourced: Bluegogo outsourced to manage their app and user interface. They also wanted to keep costs low in manufacturing and maintaining their bicycles.
What They Outsourced: Bluegogo outsourced the manufacturing of its bicycles and IT and software development.
How They Failed: Their fast expansion compromised the quality of bicycles. There were reports of bikes breaking down and being prone to vandalism. This worsened user experience and increased maintenance costs.
Practical Lessons You Can Apply:
- Do weekly audits and checks to ensure that outsourced work meets company standards.
- Invest in technology. This means setting resources for computer systems and networks to improve management and productivity. By doing this, you depend less on external companies for services because your technology can handle more tasks effectively.
4. Jawbone (Consumer Technology)
Jawbone was a tech company that produced Bluetooth headsets, fitness trackers, and speakers. The company was valued at over $3 billion.
Why They Outsourced: Jawbone outsourced to reduce cost and access specialized manufacturing.
What They Outsourced: Jawbone outsourced its manufacturing processes.
How They Failed with Outsourcing: They outsourced their quality checks which caused unnecessary delays and higher costs when they found defects. This affected customer satisfaction and brand reputation.
Practical Lessons You Can Apply:
- Implement strict quality control measures to ensure that products meet company standards.
- Communicate expectations and conduct monthly performance reviews to always stay on the same page with your partners.
- Keep a close eye on customer feedback and product performance in the market to improve product development.
5. Better Place (Automotive)
Better Place made electric cars and set up special stations where batteries could be swapped out and charged. They raised over $850 million but went bankrupt in 2013.
Why They Outsourced: Better Place outsourced to develop and deploy its technology fast, they also wanted to scale up their operations across different markets.
What They Outsourced: Better Place outsourced software development, constructing facilities, and customer service.
How They Failed with Outsourcing: They relied on too many contractors from different countries. This causes inconsistencies in the quality of its technology and services.
Practical Lessons You Can Apply:
- Develop clear communication channels and detailed contracts with outsourcing partners. Clarify expectations, deliverables, timelines, and accountability.
- Integrate customer feedback into operations. Make sure that outsourced services meet user needs and expectations.
6. Fisker Automotive (Automotive)
Fisker Automotive was an American company that produced hybrid electric vehicles. They built about 2,450 vehicles but had to declare bankruptcy in 2013.
Why They Outsourced: Fisker Automotive outsourced to reduce costs to set up its own production facilities.
What They Outsourced: Fisker outsourced the production of its vehicles. They also outsourced logistics operations.
How They Failed with Outsourcing: The large distance between the design team in the US and the production team in Finland made it hard to communicate and manage logistics. This caused issues with quality and reliability that resulted in recalls and financial losses.
Practical Lessons You Can Apply:
- Use communication tools to connect with outsourcing partners: Slack for quick messages and updates and Zoom for video calls to conduct meetings.
- Pay close attention to customer feedback and market trends. This helps you update production and business approaches to match your current needs.
7. Quirky (Consumer Goods)
Quirky was a company that turned ideas from an online community into real products. It grew to 100,000 members, brought over 400 products to market, and teamed up with major retailers and manufacturers.
Why They Outsourced: Quirky outsourced to speed up their product development process from concept to market.
What They Outsourced: Quirky outsourced product manufacturing. The outsourcing extended to some elements of product design and engineering.
How They Failed with Outsourcing: Quality control was inconsistent. The fast pace of product development did not allow adequate testing and refinement.
Practical Lessons You Can Apply:
- Scale operations gradually based on market demand to avoid stretching your finances and resources too thin.
- Consider all hidden costs and risks to keep a smooth operation.
- Test your products before releasing them to avoid expenses from returns.
5 Most Important Offshoring Lessons You Need to Know
This section summarizes the common lessons learned from the successes and failures we just discussed. We broke it down into actionable steps so it’s easier for you to implement.
1. Maintain Quality Control
Set up strong quality control rules to make sure the work meets your standards. Review the teams’ output monthly to keep the quality high over time.
Here are additional steps you can follow:
- Set clear standards: List clear criteria and what outcomes you expect. Make sure these standards are clear to everyone involved.
- Regular check-ins: Schedule monthly project reviews to address issues promptly. You can also do a quarterly review of the team’s performance evaluation.
- Use quality tools: Use automated testing software or quality checklists that the team can follow.
- Train & inform: Make sure that your outsourcing team is fully trained on your processes and understands the quality standards. Document the processes and jump on brief calls when needed to make sure everything is in place. Keep them posted on any changes or improvements.
- Feedback loop: Encourage your outsourcing team to suggest ways to make things better, and listen to their ideas.
2. Have a Risk Management Strategy
Think about what could go wrong and decide in advance how to deal with these issues. To do this, follow these steps.
- Identify risks: Start by listing potential risks like missed deadlines, communication issues, or data security threats.
- Assess impact: Consider both the chances of each risk happening and how severe its potential impact will be.
- Develop prevention plans: For each identified risk, create strategies to set up better ways to communicate, improve how you protect your data, or create backup plans.
- Monitor continuously: Arrange weekly updates and detailed reports from the offshore team. Cover tasks completed, what is in progress, and any issues encountered. This helps you see potential risks early before they become bigger problems.
- Review & adjust: Review your risk plans to see if they are working each time you reach an important project milestone. Make changes as you go, use what works, and fix what doesn’t to keep improving your approach.
3. Choose the Right Partner
Pick an offshore partner with industry expertise and knowledge of local policies. Make sure they align with your values and goals so you don’t have to switch partners later.
Here is how you can implement this:
- Define your needs: Make a list of the specific tasks or projects you need help with. This guides you to choose a partner who focuses on those areas.
- Research potential partners: Look for different outsourcing companies and review their skills, past work, and what their clients say about them to understand how trustworthy and good they are.
- Evaluate communication skills: Record how long it takes for your potential partner to respond and see if they clearly answer your questions.
- Check compatibility: Check if their way of working fits with yours. Consider their preferred instruction methods and how they handle deadlines and pressure.
- Start small: Before committing to a long-term contract, test the waters with a small project. This trial run will show you how well the partner meets deadlines, follows instructions, and communicates issues.
4. Measure & Analyze Performance
Check how your offshore operations are doing against the goals you set. This helps you make smart choices and improve your approaches.
Here are 5 steps you can follow:
- Set clear goals: Define specific, measurable goals for the team to achieve. This gives you a clear baseline to assess performance.
- Track progress regularly: Use Notion to monitor tasks and project progress. Check in weekly to monitor ongoing tasks, discuss any obstacles, and align the team’s efforts with project goals.
- Review outcomes: Compare the results of the work done against the goals you set to see what’s working and what’s not.
- Gather feedback: Ask for your outsourcing team’s thoughts and anyone else involved to point out areas for improvement.
- Adjust strategies: Based on the feedback and your review, actively make any needed changes and make sure to communicate this well with your team.
5. Ensure Clear Communication
Set up daily and weekly communication routines to bridge time zone differences and language barriers. Here is how you can do this.
- Set regular meetings: Schedule weekly or daily check-in meetings using tools like Zoom or Skype to keep everyone informed and connected.
- Use clear tools: Choose communication tools that everyone can use easily: Slack for messaging or Trello for task management.
- Create detailed guides: Provide clear instructions and document guidelines for tasks and projects.
- Establish open lines: Make sure your team knows they can reach out to you with questions or clarifications. But specify the times when you are available to respond.
Conclusion
When you decide to outsource offshore, balance the pros and cons. Make sure the benefits meet your needs and that any challenges can be managed without causing more stress than the help provided.
If you are ready to offshore, Genius can connect you to the top 1% of global tech talent for a one-time fee (no hidden charges). Our on-the-ground sourcing strategy and strict vetting process ensure you get not just any candidate, but the BEST fit for the job. Start your journey now!
FAQs
1. What is the difference between offshoring and outsourcing?
Offshoring is an outsourcing type where a company moves jobs to another country. Outsourcing is when a company hires an external company to handle specific tasks, locally or abroad. Both are ways to save money and streamline operations.
2. Does Google offshore?
Yes, Google offshores some operations to the Philippines, India, and Poland. Google uses skilled talent to handle software development, IT support, customer service, and data analysis.
3. How should companies choose locations for offshoring?
You should consider political stability, economic conditions, labor costs, skill availability, legal environment, and cultural alignment when choosing an offshore location.
4. What strategies can mitigate the risks of offshoring?
Effective strategies to mitigate risks include:
- Conduct research before selecting an offshore location.
- Diversify offshore locations to spread risk.
- Closely manage and monitor offshore operations.
- Invest in training and development for offshore teams.
