John Erwin is the Chief Executive Officer at Carenet Health.
Business leaders across the country are contending with the pressures brought on by inflation and an uncertain economic future. In just a few years’ time, the impact of a pandemic, inflation, supply chain and workforce shortages, and rising operating expenses have had healthcare companies and those in other industries increasing costs for consumers and for the customers they partner with. According to a study by the Roosevelt Institute, companies are passing rising costs on to consumers at the fastest pace since the 1950s as—among other issues—inflation continues to soar after the U.S. narrowly resolved its latest federal debt ceiling crisis.
Many healthcare companies and businesses that provide healthcare support services are following the lead of other industries by expanding their global footprint to help keep costs in check. Strengthening their offshore operations is allowing them to face economic adversity head-on, contain costs and drive scalability. That’s why I believe that in today’s global economy, business leaders who genuinely want to serve their healthcare clients with cost-effective products and services should carefully analyze how increasing their offshore operations can benefit their business, expand resources and save money. In the volatile climate in which we find ourselves, those who don’t adapt may set themselves up to fail.
Why Offshoring Is Increasing
Outsourcing business operations to other countries, which initially gained momentum in the 1970s and has increased dramatically in recent years, provides companies with a range of economic benefits and strategic advantages. Studies such as Deloitte’s Global Outsourcing Survey have found that globalization and the ever-changing labor market of the 21st century have made offshoring of services an important tool for remaining competitive. As of 2022, over two-thirds of companies in the U.S. outsource at least one function of their business to an offshore location.
For example, IBM, Google and WhatsApp are just a few of the companies outside of the healthcare space that have successfully offshored parts of their operations. With a long history of offshoring, IBM has established itself as one of the world’s leading technology companies, thanks in part to setting up software development, R&D and consulting teams in scores of offshore locations. By turning to talent outside the U.S., Google acquired Ukraine-based CloudSimple in 2020 to expand its extensive cloud-based offerings. And for WhatsApp, the move to establish development teams in eastern Europe allowed the company to grow exponentially, leading to its $19 billion acquisition by Facebook in 2014.
In the past, healthcare companies lagged behind other industries in adopting an offshore presence due to perceptions related to quality of work as well as regulations that prohibit certain roles from being performed in other countries. But in recent years, the concept of establishing a presence outside of the U.S. has been increasingly embraced as executive teams grapple with shrinking margins, understaffed and overburdened workforces and rising operational costs. Across all industries, corporate offshoring has grown dramatically since 2000 and is projected to more than double in less than a decade. According to Precedence Research, the global outsourcing market had an estimated value of more than $268 billion in 2021 and is expected to surpass $576 billion by 2030.
As this movement grows, considerations should be made on how healthcare companies can choose the best offshoring partners to ensure success. Here are a few things to keep in mind.
1. Researching The Talent Pool
When offshoring, it’s critical to research the workforce in the countries where specific operations will occur to ensure that all business needs are aligned. In my experience, business leaders should develop strategies that focus on offshore locations where there is a deep talent pool in the healthcare space, where the workforce is known for excellence in customer service, and where there is a large English-speaking population.
2. Tailor Your Messaging
Beyond the many tactical steps needed to create geographic diversity, it’s also important to think about your company’s messaging to clients regarding your operations in other countries. For example, one critique that has prevailed in the past is the implication that job creation abroad reduces opportunities for U.S. workers. Companies can address this perception by explaining why it is an antiquated view that doesn’t encapsulate the global economy in which we live. As the search for talent continues to expand globally, studies have shown that while two-thirds of companies in the U.S. (as of 2022) outsource at least one function of their business to an offshore location, the majority of those hired are based in the U.S. In 2021, the U.S. economy created 6.4 million American jobs, according to the Bureau of Labor Statistics. In contrast, only about 300,000 service jobs are offshored every year.
3. The Value Of Unique Insights
Another benefit that my team has recognized is that our workforce abroad not only possesses unique skill sets, but they also bring new ideas and different approaches to drive innovation and growth. As companies across all industries focus on the need to optimize how they do business in the current economic climate, unique insights from team members with different life experiences can be invaluable.
As the economy continues to be defined by uncertainty and industry leaders look for better ways of doing business, healthcare companies may need to rely on offshore operations now more than ever to minimize the burden of rising costs for clients and consumers. But it is important, when taking this step, to ensure you are working with a region and partners who understand and can meet your company’s needs.
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