Mid-market companies are a crucial part of the U.S. economy, making up one-third of the U.S. economy and accounting for one-third of employment. However, the U.S. has been struggling with a significant talent shortage crisis in recent years, and mid-market businesses are being hit particularly hard. One strategy that mid-market businesses use to overcome the effects of talent shortage is outsourced offshoring to find top talent.
Challenges of Talent Shortages for Mid-Market Firms
Mid-market businesses are facing significant challenges in attracting, retaining, and developing the skilled talent needed to drive growth and innovation.
Difficulty Attracting Top Talent
Mid-market companies often struggle to attract top talent, as they lack the brand recognition and resources of larger corporations. They have a smaller reach and need help standing out in a competitive job market.
Competing with Larger Companies for Skilled Workers
Mid-market firms find themselves competing against enterprises for an increasingly tight supply of skilled workers. They lack the resources and reputation that larger companies have built to entice top talent.
Lack of Resources for Training and Development
Unlike larger corporations, mid-market companies may not have the financial resources to invest in extensive employee training and development programs. This makes it difficult to attract top talent seeking opportunities for growth and advancement.
Impact on Key Industries
The talent shortage is particularly acute in certain mid-market industries. Nearly half (49%) of the mid-market healthcare industry has reported a negative impact due to talent shortage, with construction and service firms coming in just behind at 46%.
Examples of Talent Gaps
Specific examples of talent gaps in mid-market companies include a shortage of skilled software developers, healthcare workers like physician assistants, and employees with critical soft skills like leadership and problem-solving. A recent survey commissioned by RSM found that existing workers are being burned out, creating a vicious cycle of employee burnout and turnover.
Consequences of Talent Shortages
Talent shortage creates a cascade of negative consequences for companies, from higher costs to reduced innovation and poor customer experience. Addressing these shortages should be a top priority for business leaders.
Increased Costs and Reduced Productivity
Talent shortages lead to higher costs in several ways:
- Increased Recruiting and Hiring Expenses
- Companies must invest more in recruiting, headhunting, and extensive interview processes to find qualified candidates in a tight labor market.
- Higher Salaries
- Companies must offer higher salaries and more competitive compensation packages to attract scarce talent.
- Onboarding and Training Costs
- With fewer experienced hires available, companies must invest more in onboarding and training new employees to get them up to speed.
- Overtime Pay
- Existing employees must work longer hours and take on extra responsibilities, leading to increased overtime pay.
These higher costs are compounded by reduced productivity, as open positions remain unfilled and overworked employees struggle to keep up. This creates a vicious cycle of higher costs and lower output.
Burnout of Existing Employees
When there are not enough people to do the work, the burden falls on the current staff. Employees are asked to take on extra responsibilities, work longer hours, and cover for missing colleagues. This leads to burnout, stress, and job dissatisfaction. High turnover often follows, exacerbating the talent shortage.
Hindered Growth and Innovation
Talent shortages make it difficult for companies to scale and take on new initiatives. There are not enough people to dedicate to growth projects, product development, and strategic priorities. This stifles innovation and puts companies at a competitive disadvantage.
Poor Customer Service and Satisfaction
Understaffed companies struggle to provide high-quality service to customers. Clients may face longer wait times, less responsive support, and lower-quality products. This leads to customer dissatisfaction, lost business, and reputational damage.
Specific Data on Talent Shortage Impact
A 2022 survey by Manpower Group found that 75% of employers globally reported talent shortages, the highest level in 16 years. A study by Korn Ferry revealed that around $8.5 Trillion in potential revenue will be lost if the talent shortage problem is not addressed.
How Offshoring Can Help Mid-Market Businesses Scale
Offshoring is the transfer of business processes to another country for lower costs or access to specialized skills. It helps companies reduce operational costs, increase efficiency, and tap into a global talent pool.
A recent study by Manpower Group indicated that over half (55%) of employers are willing to hire internationally as hiring demand continues despite growing talent scarcity. Common offshored functions include IT, software development, manufacturing, and customer service.
Access to a Wider, More Cost-Efficient Talent Pool
Offshoring allows mid-market companies to tap into a global pool of top talent at a lower cost compared to hiring locally.
For example, a software developer in the Philippines earns an average salary of $17,579, compared to $122,478 for a US-based developer. This significant cost difference enables mid-market firms to expand their workforce without incurring high overhead costs.
Opportunity to Scale Operations
Scaling a business requires substantial investment in recruitment, office space, and infrastructure. Offshoring partners can handle these functions, allowing mid-market companies to reinvest their savings into other core areas of the business. This makes it easier to scale operations and enter new markets.
Ability to Offer 24/7 Support
Having an offshore team in a different time zone enables mid-market companies to provide 24/7 customer support. This can lead to higher customer satisfaction and sales, as clients receive immediate assistance regardless of the time of day. For example, a US-based company with an offshore team in the Philippines can offer round-the-clock service.
Improved Operational Efficiency
Offshoring can streamline workflows and improve operational efficiency. When processes are well-defined and documented, an offshore team can take over repetitive tasks, freeing in-house staff to focus on higher-value work. This allows mid-market firms to optimize their operations and scale more effectively.
Access to Specialized Skills
Through offshoring, mid-market companies can access specialized skills and expertise that may be difficult to find locally. Offshore providers often have a deep talent pool in software development, accounting, and digital marketing. This allows mid-market firms to build specialized teams to support their growth.
Offshoring allows mid-market businesses to scale operations, reduce costs, improve efficiency, and access a wider talent pool. By partnering with an experienced offshore provider, they can overcome hiring challenges and focus on their core competencies to drive growth.
Offshoring with iSupport Worldwide for Mid-Market Success
iSupport Worldwide, a US-owned offshoring company based in the Philippines, offers businesses professional and global outsourcing services, exceptional staffing, and operational management.
iSupport’s pricing models are tailored to clients’ needs, offering low-cost but high-quality services. Led by experienced executives, iSupport Worldwide has received positive reviews for its agility and responsiveness.
A Hotel Chain Finds Top Talent for Accounting & Finance
A hotel chain having trouble finding top talent for its finance and accounting division turned to iSupport Worldwide for assistance. The hospitality company realized considerable cost savings of between 30% and 50% because iSupport effectively filled the talent shortage by hiring highly competent accountants and finance managers.
A Wholesale Company Scales Its Business with 24/7 Operations
After COVID-19, a wholesale company saw tremendous business development; nevertheless, the U.S. talent market produced few applicants to support its expanding personnel demands.
Within 30 days, iSupport delivered talented, quick learners. Its pricing model allowed the wholesale company to save up to 78% to 138% on costs, enabling it to provide round-the-clock customer service.
An Energy Company Improves Its Operations
Early on, a renewable energy company’s customer satisfaction response was at an all-time low, with a TrustPilot score of 1.6. iSupport improved the energy company’s customer service, resulting in a 3.8 TrustPilot score and a 93% boost in productivity.
This turn-around was made possible by strict screening procedures and stringent requirements for offshore service providers, which guaranteed the quality of services regardless of location.
Key Takeaways
Mid-market businesses are facing a talent shortage crisis that leads to increased costs, reduced productivity, employee burnout, and poor customer service, as well as hinders growth and innovation.
Offshoring can help overcome these challenges by providing a wider talent pool, improving operational efficiency, and tapping into specialized skills. Mid-market companies should explore offshoring now to secure skilled workers for growth and innovation.
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