Startup owners panicking

Running a business entails taking calculated risks, whether it’s adopting the latest marketing trends or implementing cutting-edge software for operations. However, not every investment is fruitful, leading some to question if offshoring solutions are worth the gamble. 

Silicon Valley Bank (SVB) recently made headlines due to a massive collapse. In 2022, SVB was the 16th largest bank in the U.S. and a favorite among venture capitalists and startup owners for its business bank accounts, primarily used for payroll and innovation expenses. 

Like other banks, SVB invested customers’ assets in U.S. government bonds, including mortgage-backed securities that were expected to yield stable returns. Regrettably, the Federal Reserve’s decision to raise interest rates led to SVB losing significant value on these bonds.. 

The timing was unfortunate, as SVB’s clients initiated a bank run. Unlike larger banks, SVB lacked the liquidity to fulfill all customer withdrawal requests, as most of their funds were tied up in bonds. 

The SVB failure is one of three recent bank collapses that rattled the financial landscape, with Signature Bank and Silvergate Bank facing similar issues. Both banks primarily serve crypto companies, while SVB’s clientele predominantly consists of startups—44% of U.S. tech and healthcare companies have business  

Startups that invested their capital in SVB now find themselves in limbo. Although their funds are secured or invested with the bank, they cannot access them. Consequently, their lines of credit are negatively impacted. Founders and startup owners affected by the SVB collapse must now seek alternative ways to cover business expenses, fund innovations and technologies, and pay employee salaries. 

The two-day collapse of the U.S.’s 16th largest bank served as a harsh lesson for business owners, both affected and unaffected: be cautious where you put your money. 

Startups affected by the bank collapse are  in a financial crisis, but even those who aren’t should be vigilant about where they invest their capital. This caution applies not only to business bank accounts but also to other investments. The SVB debacle has led many to reevaluate long-term business strategies, including offshoring. 

Why Businesses Invest in Offshoring

Investing in Offshoring

Offshoring is a business solution targeting key components of a long-term growth strategy. It grants access to a vast pool of talented and skilled professionals across various fields, such as IT, finance, and other essential business functions. Offshoring helps businesses attract and retain top talent, crucial for long-term growth. 

Offshoring can also significantly reduce labor costs, especially in countries where labor costs are relatively lower. This allows businesses to invest more in other areas like marketing, research and development, and innovation. 

Offshoring can also grant businesses access to new markets, particularly in emerging economies. This helps companies tap into new customer bases, expand their product offerings, and diversify their revenue streams. 

Offshoring can also give businesses access to new markets, particularly in emerging economies. This can help companies tap into new customer bases, expand their product offerings, and diversify their revenue streams. 

Perhaps offshoring’s best feature is that it can provide businesses with greater flexibility in responding to changes in the market, such as fluctuations in demand or shifts in customer preferences. Offshoring can allow enterprises to quickly ramp up or down operations as needed without incurring high fixed costs. 

Success is often attributed to several factors such as innovation, market demand, and efficient operations. However, one crucial element that plays a significant role in achieving success is taking risks in investments. In today’s dynamic business environment, where competition is fierce, and customer preferences change often, companies that do not take calculated risks in their investments are likely to fall behind. 

Investing in offshoring requires companies to take those calculated risks, but it also offers the potential for significant rewards. Offshoring, when fully integrated into operations, can become a passive strategy like a company putting its cash in investment bank accounts. However, offshoring’s results are more visible and manageable because it is a two-way street. 

Taking an Active Approach to Make Offshoring Work

Asian offshoring team at a desk with plenty of work items.

Just like with any other business investment, offshoring can succeed if business owners dedicate effort and resources to the solution. Offshoring can be an effective strategy for businesses to reduce costs, improve efficiency, and access new markets. However, business owners must still be proactive, particularly in these strategies: 

Developing a Clear Offshoring Strategy 

Business owners must develop a clear offshoring strategy aligning with their long-term business goals. The offshoring strategy will help them identify the processes or operations that can be offshored and lead to the best results. 

Invest in Communication and Collaboration 

Effective communication and collaboration are critical to the success of offshoring. Business owners must invest in technologies and tools that ease communication and collaboration, such as video conferencing, project management software, and cloud-based storage. The strategy should also include working with the account managers for the offshoring partners to communicate adjustments or urgent needs. 

Provide Sufficient Training 

Access to the global talent market does not mean your offshored team will automatically fit into the company system and culture. Business owners must supply sufficient training to their offshore teams to ensure they have the necessary skills and knowledge to perform their tasks effectively. 

Choose the Right Offshoring Partner 

Business owners must choose the right offshoring partner who can provide the necessary ability, experience, and resources to support their operations. This includes conducting due diligence, verifying credentials, and assessing the provider’s ability to meet quality and service standards. 

It is given that offshoring can and will reduce one of the most significant investments companies have to absorb: labor costs. Hiring and paying talent will easily eat up over one-third of the company’s business expenses, with some even dedicating 80% of their revenue to payroll. Offshoring can significantly reduce that, making it the ideal investment for long-term growth strategies. 

Why Your Investment is Secure with iSupport Worldwide

offshore team with the iSupport Worldwide

There is no denying that businesses must ensure that their investments are in the right place, whether it involves identifying the right bank to partner with or the proper way to handle offshoring solutions. With iSupport Worldwide, businesses will be assured they are in the right direction. 

iSupport Worldwide is a premier offshoring company based in the Philippines. Its familiarity with one of the world’s most flexible and highly skilled talent markets allows clients to enjoy end-to-end staffing solutions, complete with world-class support services to make remote operations not only possible, but also successful. 

Investments need careful consideration in today’s business landscape. Fortunately, iSupport Worldwide’s offshoring solutions provide businesses with a proven and flexible strategy to ensure long-term growth and success.