Any business striving to grow and reach the next milestone must find new ways to improve or diversify its products and services. Whether entering a previously untapped market or testing new products, a business will eventually find it necessary to venture into new prospects to overcome a plateau, whether by urgent crisis or profit stagnation.
A Case for Business Diversification
Let’s take Amazon, for example. Most people today know it as the premier e-commerce shopping store that sells just about everything you can imagine—from a handy kitchen seafood cracker to an 1896 S American Silver Morgan Dollar worth $134,995. Their inventory selection boasts a humble 100 million plus products.
However, a decade ago, Amazon was more focused on selling books. Does anyone else remember the Kindle? It was only later that they realized they should expand and diversify their product listing—and thus, they became the everything store.
Amazon saw extraordinary growth even after the tech bubble burst in the 2000s—and even more with the proliferation of Web 2.0. Then in 2004, Amazon made one of its best business decisions in launching Amazon Web Services (AWS). AWS is Amazon’s cloud computing company that provides businesses with affordable cloud computers and servers to host large-scale websites and applications.
Here’s an interesting fact. Did you know that Amazon’s e-commerce arm isn’t its main source of revenue? That’s right; Amazon barely makes a profit with every delivery. The business service that propelled them into a global empire, ships approximately 1.6 million packages daily, and takes in 66 thousand orders per hour, hovers around negative to break even due to how costly fast delivery guarantees are. Most of Amazon’s profits come from their digital ad revenue and Amazon Web Services (AWS), which takes up the majority of the market share against their competitors, Microsoft and IBM. Today, Amazon owns hundreds of smaller companies and subsidiaries across different industries.
What can SMEs learn from Amazon’s business strategy?
Diversification.
Diversifying a company’s income stream, services, and processes gives it more pillars tao stand on and a bigger safety net when a crisis occurs. During the pandemic, many professionals and business owners quickly realized the importance of having more than one reliable income stream. For a business, the concept remains the same.
Diversification is key to growth and maximizing opportunities. Tech giants such as Amazon, Microsoft, and Google could not have reached their size today without improving and expanding their products and services. However, it’s easier said than done. Diversification strategies without sufficient resources and safety nets for failure can have devastating effects on a company’s bottom line. So, what can be done to mitigate these risks?
Offshoring as Part of a Diversification Strategy
A well-executed offshoring strategy provides diversification and a pathway to other growth opportunities. It gives businesses the margins and capacity to execute more robust strategies.
Let’s explore why offshoring should be a part of a business’s diversification strategy and how partnering with an offshoring company can be advantageous for long-term success.
Cost Savings
One of the main reasons why offshoring should be part of any business’ diversification strategy is undoubtedly cost savings. Many countries, particularly developing economies, offer lower labor costs compared to more developed countries. Businesses can significantly reduce operational expenses by offshoring certain business processes or services. This can be especially beneficial for small and medium-sized enterprises (SMEs) with limited budgets, as offshoring can provide access to cost-effective labor without compromising quality.
Broader and Deeper Talent Pool
Offshoring allows businesses to tap into global talent pools and find skilled workers who may not be available or affordable locally. For instance, a software development company in the United States may choose to offshore its customer support operations to a country with a large pool of English-speaking agents, resulting in improved customer service and cost efficiencies.
Operational Flexibility
In addition, offshoring can offer businesses increased operational flexibility. Outsourcing certain functions to an offshoring company can enable businesses to scale their operations up or down quickly in response to changing market conditions. This can be especially valuable in industries with fluctuating demand, where businesses need to be agile and adapt to changing customer needs. Offshoring allows businesses to quickly ramp up or reduce their operations without the need for major changes in their local workforce, which can be time-consuming and costly.
Access to Global Markets
Furthermore, offshoring can provide businesses with access to global markets. Partnering with an offshoring company located in a foreign country can offer businesses insights into local markets, cultural nuances, and consumer preferences. This can be invaluable when expanding into new markets or targeting international customers. By leveraging the expertise and local knowledge of an offshoring company, businesses can make more informed decisions and tailor their products or services to meet the specific needs of different markets, leading to increased customer satisfaction and business growth.
Risk Mitigation
Another advantage of incorporating offshoring into a business’ diversification strategy is risk mitigation. By diversifying their operations across multiple countries, businesses can reduce their dependency on a single market or region. This can help mitigate risks associated with geopolitical instability, regulatory changes, natural disasters, or other unforeseen events that may impact a particular location. For example, if a business has its entire manufacturing operations in one country and that country experiences a labor strike, it may face significant supply chain disruptions. However, by diversifying its manufacturing operations through offshoring to multiple countries, the business can minimize the impact of such risks and ensure the continuity of operations.
Diversify with iSupport Worldwide
Are you considering diversifying and offshoring but worried about the complications that can come with them? Choosing the right offshoring company to partner with is crucial, and iSupport Worldwide is the perfect choice.
Based in the Philippines, iSupport Worldwide is a leading offshoring company that offers everything you need to make offshoring an effective long-term business solution. With a customized offshore team of specialized experts and top-notch facilities and support services, iSupport Worldwide has everything you need to achieve your business goals.
But what sets iSupport Worldwide apart is our commitment to making the process as simple as possible for our clients. We understand that you want to enjoy the benefits of offshoring without any unnecessary headaches. So why not set up a meeting with them to find out how easy it can be? With iSupport Worldwide, turning offshoring into a long-term strategy for your business growth has never been simpler.