What are the Key Offshore Outsourcing Pros and Cons 2021?

What are the Key Offshore Outsourcing Pros and Cons 2021?

Since the global IT market is rapidly growing, the companies have to come up with ways that’ll help them avail the benefits of software development. The rising demand for tech specialists means that they ask for higher salaries, which might not be suitable for all organizations.

So, the businesses seek help from external parties. This trend resulted in the outsourcing and offshoring skyrocket. They became major business buzzwords, and there is a combination of both, known as “offshore outsourcing.” 

In this article, Qubit Labs will dig into the mentioned term and explain how you can benefit from it while reviewing pros and cons of offshore outsourcing.

Let’s get started! 

 

What is Offshore Outsourcing Definition?

Before we get to the offshore outsourcing definition itself, it’s necessary to divide it into components and address each of them separately.

Outsourcing is a business practice that implies hiring an external organization that will perform your job or services. It’s a cost-saving measure, and you can draw up a contract, set the deadlines, and be sure you’ll receive a smooth and hassle-free delivery of services. Currently, almost 54% of the organizations cooperate with third-party companies that help them deal with non-core business tasks.

Offshoring implies transferring certain business operations of a company to another county in an attempt to save costs and use them for core business tasks. Offshoring development has appeared after outsourcing because businesses wanted to have some sense of ownership. They searched for a business model to control their projects yet needed it to remain scalable and cost-efficient.

 

What are the differences between outsource and offshore IT services?

 

Well, there are a few. 

Outsourcing means that you contract specific tasks to an external organization that has significant experience in the required field. It can be done both locally and abroad. The specialists performing your work will be the vendor’s (third party’s) employees.

Meanwhile, IT offshoring involves shifting your business operations to a different country, where the operations will be under your company’s name. It’s about reducing costs but still receiving high-quality services from your own foreign employees. 

Both of these business practices have their strengths, and selecting the right option might be rather troublesome. That’s when offshore outsourcing comes into play because everyone’s up for a double advantage. So, what are pros and cons of outsourcing and offshoring?

Offshore Outsourcing

 

Key Advantages of Offshore Outsourcing

1. Fast and efficient processes

It’s 24% of small businesses that consider efficiency to be the main advantage of offshore outsourcing in their case. So, count yourself: training employees in-house, giving them time to adapt, and waiting for them to start delivering results might take months.

Is it worth it? Not in every instance.

In this case, offshore outsourcers will have your back. They find the required specialists within a week or two, and you get faster results because you cooperate with experts right away. No more downtime; just quick results and improved time-to-market.

 

2. Your company can focus on its core competencies

The opportunity to evenly distribute the load between all the employees is one of the most critical advantages of offshore outsourcing. The employees won’t be struggling to manage tasks that are out of their competencies; you’ll have professionals to handle these tasks. Your team, instead, will focus on achieving the main goals for your business.

 

3. High-quality services

Quality and innovation are often discussed in terms of outsourcing and offshoring pros and cons. The right vendor will ensure a clear price-to-quality ratio. You get value for your money. Reliable offshore outsourcers help your business win over the market and stay ahead of the competitors, offering relevant products and services. In case your internal team fails to produce the products and services of the expected quality, consider IT offshoring.

 

4. Access to the pool of top developers and technologies

The benefits of offshoring also include the opportunity to develop products and services in new niches without racing against the clock while trying to follow the constantly emerging trends. You name the technology, be it Artificial Intelligence, IoT, or Big Data, and the vendor finds skilled employees. It’s simple like that: hassle-free and with up-to-date solutions.

The most apparent advantage of offshore outsourcing is cost savings, which is evident in 70% of cases. On average, the company can save up to 60% in operational costs due to outsourcing.

 

Major Disadvantages of Offshoring

 

1. Security risks and regulatory differences

The main concern of offshore outsourcing is the confidentiality of business information. It’s necessary to limit remote access to sensitive information to make sure your offshore partner cannot steal it and, hence, copy your product.

A reliable vendor will inform you about its prevention technologies for data flow control and security policies regarding offshoring development. Also, it’ll tell you about how the employees follow these measures. You have nothing to worry about in such a case, so it’s better to double-check when selecting an offshore partner and make sure it fits the requirements.

 

2. Lack of control 

This is probably one of the most critical disadvantages of offshoring because, sometimes, small details are left unnoticed, resulting in massive issues over time. It’s often when the remote developers miss deadlines and deliver the products or services full of issues.

So, a loss of control might lead to massive backlogs, affecting the image of your whole company. Make sure that you check the candidates’ competencies and thoroughly go over their experience. In case your team includes only vetted specialists, you won’t be afraid of entrusting all the processes to them, checking how the processes are going from time to time. 

Go for experience and skills instead of the lowest bidder. 

 

3. Cultural and time zones differences

There are multiple pros and cons of offshoring, but this one is the least “predictable.” People from different countries have different attitudes to problems and approaches to tackling them. So, you might be questioning the effectiveness of certain methods used by remote employees. When selecting the offshore outsourcers, make sure to discuss the usual practices and find a consensus to prevent possible misunderstandings.

The communication gaps are among the disadvantages of offshoring too. For example, suppose you want to introduce urgent changes to the project, but all your remote employees are offline because it’s nighttime in their country. There are two choices in such situations: trying to handle the issue yourself or waiting for the team to come online.

 

Wrapping Up

Companies like Google, Skype, Apple, GitHub, and Alibaba have understood the fundamental truth — focusing on the core business goals, and outsourcing non-core operations makes them more effective, helps to save money, and ensures rapid growth. 

If you are a startup or a small-medium business, the mentioned list offshore outsourcing pros and cons can help you make a game-changing decision that’ll boost your company’s growth.

A reliable tech partner like Qubit Labs will make sure you work with expert developers at a reasonable price. We’ll help you expand your business while staying within the mentioned budget. Feel free to contact us to discuss the details!

 

Related Articles:

Full Guide on Dedicated Software Development Team Model

Problems of Outsourcing and How to Deal with Them

What Is ODC — Offshore Software Development Center?

What Is Outsourcing? Definition, Types, Benefits for Businesses

Ukraine IT Outsourcing Market General Overview

How to Hire Software Developers in Ukraine

 

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Oksana Zabolotna
HBD at Qubit Labs
Oksana is a team leader of sales and marketing team at Qubit Labs.