Is Outsourcing or Offshoring Right for Your Business?
Offshoring and outsourcing are terms that are often thrown around in business, but what do they actually mean? In this guide, we’ll explain the differences between the two, so you can choose the one that’s right for your company.
We’ll start with the basics of outsourcing, then move on to the differences between offshoring and outsourcing, how it can help your business, and how to make sure it’s done ethically.
Why Outsourcing vs. Offshoring?
If you’re looking to develop a new application, but don’t have a development team in-house, outsourcing is going to be your best bet.
On the other hand, if you have existing employees who can support your application maintenance needs, offshoring may make more sense. Of course, offshore companies with onshore development teams are also a viable option.
Do You Need to Outsource/Offshore At All?
The first step in making a decision about outsourcing or offshoring is to make sure you have a reason to do so.
If your business needs less than 30 hours of work done per month, it may not be worth it, as offshore and IT outsourcing are usually costlier than hiring an employee directly. The idea is that you're paying less to businesses overseas, because they use cheaper labor—so if you're not saving money in comparison to hiring locally, there's no point in going through with it.
It's especially important to consider outsourcing or offshoring if your business is new; otherwise, cutting costs could actually hurt your chances of long-term success.
How Much Should You Outsource/Offshore?
Businesses of all sizes are shifting operations to countries like India, China and The Philippines where labor costs are much lower.
But how much work should you send overseas? In general, companies that look to offshore their business outsourcing services as a way to reduce costs and increase competitiveness should look at candidates with roughly equivalent skills.
It's important to match jobs in terms of what they require and skill level; it would make little sense to hire somebody with a job that requires a high level of technology expertise if your overseas department is staffed by professionals with minimal IT knowledge.
How Will You Handle Quality Control Issues?
When you outsource work, especially work as complex as IT outsourcing, it’s easy to lose control of quality.
You may be lucky and have a long-term partnership with your vendor—but don’t assume that their employees will take care of your issues in exactly the way you would.
Can You Find The Right Resources?
If you’re contemplating outsourcing your services, be sure to consider how accessible and reliable a company is. It might seem like an obvious choice to get cheap offshore labor, but many business owners have experienced lackluster results because they have difficulty communicating with their overseas resources.
Depending on your project needs, you may need skilled freelancers rather than large-scale business outsourcing services. Because of recent advancements in technology, using freelancers allows you to easily and affordably meet your growing demand without sacrificing quality.
Will Your Employees Be Upset With This Move?
How you handle your employees is as important as how you handle your business. While outsourcing overseas can help boost profits and productivity, you may find that it creates a trust deficit with your employees who fear they’ll be next on the chopping block.
You may also find that moving work off-site forces some of your best employees to look elsewhere for work if they are unhappy about not being involved in the decision making process.