The Benefits and Risks of Outsourcing and Employing Globally with Blockchain

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Written By Juliet D'cruz

In recent years, businesses have increasingly depended on outsourcing and global employment to cut costs and access a broader talent pool. Outsourcing means contracting an outside organization or individual to do specified tasks or jobs. Global employment, on the other hand, refers to hiring people from all over the world as a way to expand business operations.

Both practices have unique benefits and risks you should consider carefully before implementing them. However, there’s an emerging technology that could mitigate the associated risks of both practices. It’s blockchain technology.

Blockchain, as a secure transacting platform, can revolutionize your outsourcing and global employment plans. To help you understand, this article will first discuss the pros and cons of outsourcing and global employment and how blockchain can mitigate their inherent risks. 

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Benefits of Outsourcing

Outsourcing primarily helps your business offload repetitive tasks, giving you space to focus on more impactful work. Below are a few more advantages of outsourcing.


Outsourcing enables companies to take advantage of lower labor costs in other countries. For instance, an e-Commerce customer service may outsource its customer support department to call centers in the Philippines. They may do this because the cost of living is 72% lower than United States employment

The result is significant savings and an increase in profitability. 

Access to expert skills and knowledge

Instead of spending months training their employees, companies can delegate certain tasks to individuals or companies who have specific expertise or experience in those areas. This can be particularly beneficial if you’re running a small business and don’t have the resources to hire full-time employees with the skills you need.

You can also outsource some aspects of the business, such as human resources or accounting. Having another entity handle these matters may be more affordable than hiring an in-house team, allowing you to focus on company operations, strategies, and goals. 


Outsourcing allows companies to quickly and easily scale their operations up or down as needed. For instance, if a company suddenly needs to ramp up production, it can promptly delegate specific tasks to increase capacity.

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Risks of Outsourcing

As beneficial as outsourcing can be for your business, it also comes with its downsides.

Loss of control

When a company subcontracts a task, it essentially hands control to another business or individual. They’ll also be mainly in charge of hiring and training new employees. These can make it challenging to ensure the job is completed to the parent company’s satisfaction and can lead to quality control issues. 

Communication and cultural barriers

Ensuring all directions are clear can be challenging when working with an external company or individual. Differences in language, time zones, and cultural norms can create communication impediments that make collaborating difficult.

Data breaches and security issues

When working with an external company, you essentially share confidential information with another party. The exchange can increase the risk of compromised security systems, which can be particularly problematic if you deal with sensitive customer data.

How Blockchain Can Mitigate the Risks of Outsourcing

Blockchain is a decentralized ledger that allows secure, transparent, and tamper-proof record-keeping. It can help improve supply chain transparency and traceability, reduce fraud, and enhance security, among other features, which allows it to mitigate some outsourcing risks.

Provides secure and transparent smart contracts

In simple terms,  are self-executing contracts that directly write the terms of the agreement between the seller and buyer into the system’s code. These tools can cut out the necessity for middlemen and lower the chances of fraud and mistakes.

The system reads the terms, detects whether either party meets the conditions, and automatically updates when the transaction completes. Once this happens, neither party can change the terms and only view the results. 

Other features of smart contracts include:

  • Automation of contract execution
  • Facilitation of verification and validation of contract terms, 
  • Assistance in managing your customer data platforms

Improves communication

Blockchain can allow companies to track and manage transactions, ensuring everyone is on the same page and securely sharing information. This is especially beneficial when a company works with professionals across different time zones who speak different languages and have different cultural backgrounds. 

Protects against manipulation

Blockchain provides a tamper-proof way to store and share sensitive data, significantly improving security. It can do this because of its decentralized and distributed nature. Multiple nodes in the blockchain network store data, making it much harder for criminals to hack or bypass. 

Additionally, blockchain’s encryption and digital signature technologies can help ensure that only authorized parties can access the data. 

Benefits of Global Employment

Besides outsourcing, global employment, also known as international hiring, has become increasingly popular recently, especially for businesses seeking to expand their operations to new markets.

Below are a few reasons why businesses are beginning to practice global employment.

Access to a diverse talent pool

Hiring employees from different countries allows businesses to tap into various expertise and cultural backgrounds. This can be especially beneficial for companies seeking to fill positions that require specialized skills or knowledge that may not be readily available locally.

International staff can help you find the best talents without limiting your prospects to your home country. It can also help you cut costs if you look into countries with lower standards of living and labor costs.

Understand local cultures

Strong relationships require understanding each other’s culture and language. Foreign employees can help you establish relationships with suppliers and customers from their home country. These connections can open your business to opportunities and offer you a competitive edge in the global market.

More diverse and creative ideas

Diverse teams with different perspectives and experiences can bring fresh ideas and solutions to the company’s challenges. Different viewpoints can lead to new products and services, around 45% increased revenue and improved processes.

Global employment is similar to outsourcing, where businesses delegate work to external service providers to save costs. However, businesses must also consider the potential risks and challenges that may arise with this working arrangement.

Risks of Global Employment

Global employment can offer a range of benefits, but it also carries inherent risks. 

Compliance issues

Expanding to another country successfully entails understanding their labor laws. If you bring in team members from headquarters, you must also study immigration laws and process work visas. 

Complying with these requirements is essential to avoid legal issues and fines; failure to do so can damage your company’s reputation and lead to long-term financial and legal consequences.

You may need to allocate resources to hire an employment lawyer to remain compliant. They’re updated on the latest changes or amendments to local laws to provide you with sound legal advice. 

Cultural differences

Effective communication is critical in ensuring you and your international staff can work together productively. Countries have different cultures and ways of doing business, which could lead to misunderstandings and conflicts. 

Currency and payment issues can also pose a significant risk. Navigating other currencies, payment systems, and time zones will take some time, which could increase costs and cause operational delays. 

How Blockchain Can Mitigate the Risks of Global Employment

Blockchain can help mitigate some risks associated with global employment, similar to how it does for outsourcing. The technology can help you manage payments and contracts and navigate compliance issues, cultural differences, and currency issues.

Facilitating cross-border payments

Blockchain technology can transfer funds across borders by allowing you to make tiny payments through Bitcoin or other currencies available on the market.

These small payments make it easier for you to keep track of transactions and pay employees across different countries without going through banks or other mediators. It can also help reduce costs and eliminate currency exchange issues.

Remaining compliant with local laws

Using smart contracts to manage employment agreements, you can automate compliance requirements and ensure they meet all relevant legal and regulatory requirements.

Improved collaboration and communication across global employees

As the Harvard Business Review suggests, blockchain’s security and transparency make it easier for businesses, clients, and partners to trust one another. The increased level of trust allows teams to collaborate and communicate much better. 

Expand Your Business Through Blockchain

The business world is rapidly evolving, with outsourcing and global employment becoming popular and providing significant benefits. However, these strategies have risks like miscommunication, data breaches, and compliance issues. You can also run into quality issues due to losing control over some aspects of your company.

Blockchain has the potential to change the world on a global scale. As it advances, so do the opportunities to use its platforms to mitigate the risks you associate with outsourcing and global employment. Transacting and communicating through the blockchain is safer and can automate several processes, such as payments and contracts.

A proactive approach to risk management can help you make clear plans. Consider outsourcing and global employment’s advantages and disadvantages, and study the blockchain’s benefits. Planning wisely and using blockchain technology can safely expand your operations and slowly build your company toward success.