How Do You Know If Offshoring Is Benefitting Your Small Business?

Key takeaways:

• KPIs measure a business’s success with objectives and against its industry’s peers.
• KPIs can be measured in each department of a business, from customer service to production.
• Businesses can measure specific KPIs to estimate their offshoring team’s capabilities.

You’re making big moves for your small business. You took the plunge and started your offshoring journey. Your business is making great strides and the future looks bright. Now, measuring your success and what is helping you achieve it is the key to reaching even greater heights.

When you’re expanding your business, you have a lot of irons in the fire and it isn’t always easy to know which moves are paying off and which aren’t. Keeping track of your KPIs is the most efficient way to gauge what’s having the biggest impact on your business. 

KPIs vary between industries and depend on specific performance criteria. They are not only comprised of financial data, which is a common misconception, but of all business goals. 

Year-Over-Year (YOY) revenue growth may tell you what you want to know. Or, maybe same-store sales metrics are more valuable in your case. KPIs will give you the facts when you’re trying to measure if you’re meeting specific objectives. 

Offshoring is a significant business move and if you’re utilizing it, you want to make sure it’s paying off. When you measure the effects of offshoring, there are four specific KPIs to watch closely. 

We take a look at these four key metrics, why they’re important, and some limitations you might encounter when using them. 

1. Operating efficiency metrics

Meeting every deadline is critical for small to medium-sized businesses. One slight delay can turn into an avalanche of missed deadlines and lost revenue. Clients look for vendors that deliver on time and stand by their agreements. 

Monitoring deadlines and milestone checkpoints with your offshoring team will:

• Allow enough time for planning changes in the project
• Ensure the right people are doing the right jobs
• Deliver accurate benchmarks to clients and partners

Operating efficiency metrics like these tell you if your remote team is helping you or holding you back. Delivery delays can be a problem with offshore teams, especially if communication is lacking. A professional team will provide timely work as well milestone reports so you always know where you stand. 

2. Customer relations metrics

Finding leads, properly engaging with them, and making them into customers is vital for a business, especially one that is just gaining a foothold in the industry. Customer-focused KPIs pertain to customer satisfaction, retention, and per-customer efficiency to provide a clear picture of what’s happening with your consumer base.

Some important customer KPIs in this arena to watch are:

• Customer Lifetime Value (CLV) – The expected amount of money a single customer spends in a lifetime.
• Customer Acquisition Cost (CAC) – The total cost in sales and marketing to acquire a new customer. 

Comparing these two customer-focused KPIs gives an approximate measure of customer acquisition. If you’re offshoring to increase customers, these numbers will tell you if you’re succeeding.

3. Process performance metrics

Offshoring just one or two functions makes perfect sense for smaller businesses. That doesn’t mean those are the only things to keep a watchful eye on, though. The overall condition of your business is always a good indicator of its health. 

Throughput time is an excellent metric to watch in this category. It is the length of time it takes to run a business process like a drive-through window or visitor check-in. A few other informative process performance metrics are:

• Return On Investment (ROI) – The measurement of the profitability of an investment. 
• Quality indicators – The percentage of saleable goods out of the total output. 

Process performance metrics measure operational aptitude across the board. It helps you recognize gaps in your processes as well as what’s working well. Performance metrics promote transparency throughout the organization and open lines of communication. 

4. Conflict resolution metrics

Communication is of the utmost importance when you’re working with an offshore team. You have to impart a clear understanding of your business processes to someone who may not share the same culture, social structure, or native language. Communication issues are prone to arise in these circumstances. It is the way they are resolved that matters most. 

One of the most popular ways to gauge this metric is by measuring changes in managerial staff engagement with subordinates. Positive engagement and constructive collaborations increase when conflict resolution measures are successful. Other relationship metrics can be good indicators too, such as:

• Problem-solving 
• Positive interactions 
• Timely communication

Measuring how well conflicts are resolved internally is a good indicator that your offshoring team has things under control. It’s easier to increase profits when your inner machinations are running smoothly. 

Limitations in using KPIs

KPIs are undeniably helpful for any size business. That doesn’t mean that they are perfect for every situation. There are some limitations to a KPI’s usefulness. Keep these facts in mind:

• Not designed for quick action – A KPI takes time to develop. It is an accumulation of data over a specified time to describe how a process is evolving. 
• Learning curve – KPIs provide a lot of information about each small section of your business. It takes some research to understand how best to implement all of that information.
• Misuse – Sometimes, employees find ways to game the system and the KPI information is less accurate.

Despite their few limitations, KPIs are valuable tools in assessing the efficiency of your offshoring team. The specific metrics you use should be related to the business processes you’re offshoring but a larger perspective is helpful on a secondary level. It’s important to know that your investment in offshoring is paying off. If not, you may need to make staff changes or clear up communication blocks.

Reach out to a professional when you have questions

Knowing how and when to use a KPI is as important as the information it holds. DOXA helps small to medium-sized businesses build high-performing, scalable, global teams. We are a global business services firm structurally aligned to deliver better results for small businesses. Using our proprietary system, we ensure that SMBs have the infrastructure, tools, and resources to compete with larger organizations. Contact us today for a free consultation.