Offshore outsourcing in the IT industry is the practice of hiring external organizations in other countries to effectively deliver IT-enabled business processes, application services, and infrastructure solutions for business outcomes.
Many companies nowadays work with offshore IT providers in order to develop their IT projects. So, what do companies hope to gain from offshore outsourcing? Outsourcing is positioned today as a growth accelerator for business and brings businesses great benefits that made it a big buzz phase in the business community.
So, let’s start there. What are the benefits of IT offshore outsourcing?
IT outsourcing helps businesses by moving some of their IT tasks to external companies so that they can concentrate on the main functions. Outsourcing is extremely helpful when businesses have a heavy workload. Outsourcing gets businesses to access professional expertise from providers as the service they provide is their core business and they’re always on top of the game.
Many businesses have adopted offshore outsourcing as part of their business model because of the big savings on labor costs. Compared to other regions, Southeast Asia has a much lower cost of living and wage range. Companies that outsource work to the region can cut their labor costs by 70%, even up to 90%, all while providing their outsourced labor force with a decent, livable wage. Vietnam, for example, is a developing nation in the region, despite the massive economic breakthroughs it’s been making through the years the average annual salary of a software developer in Vietnam is around $9,000. On the other hand, an annual average software developer salary in the USA is $110,638, meanwhile, in Israel, it’s $76,791, in the UK-$68,462, in the Netherlands-$54,025, and in Germany-$60,162.
IT outsourcing companies hire carefully selected professionals with many years of experience in the industry. They also continuously improve their competencies, follow market innovations and solve non-standard problems with hardware, systems and software.
They are experts who have experience working with many clients and helping them solve specific problems. Therefore, they can offer the best solutions to the business and quickly remove any errors. Companies providing IT outsourcing services employ engineers who specialize in many niche fields of IT, so if there is any problem with the IT infrastructure in your company, there should always be an expert in the team who will quickly remove the irregularities.
Outsourcing would definitely help organizations reduce their capital costs by cutting on facilities, equipment and staff that occupies that space and uses that equipment. Outsourcing eases the expenses relating to workspace, equipment, recruiting, and so on. When you outsource, you only pay for outputs, reducing the fixed costs. On the other hand, if you do the work in-house, you have all the costs of providing for staff, facilities, and equipment whether you are using them to the full or not.
Software engineers are the most sought-after laborers on the job market and recruiting the right people can be demanding. The burden can be carried by specialized companies that will manage recruitment, management, and training of the engineer's team working on the IT project. With a massive shortage of IT staff, finding the right people is a big challenge. In some companies, it even takes more than 3 months to recruit a programmer.
Outsourcing is a solution to this problem and allows companies to quickly scale up their IT team and avoid taking the risk of hiring the wrong candidates. It is a beneficial solution when companies need a specific skill for a short period. Also, it gives companies great flexibility and allows them to adjust the number of software developers involved in the project according to their current needs.
In addition, the IT service provider will provide all the tools and methods necessary for the collaboration between the client company and its offshore team to take place in optimum conditions.
Time zone differences when it comes to offshore outsourcing can be beneficial to both teams, in which the offshore team takes on the work in the client’s nighttime and returns the result in the next day’s morning. This round-the-clock model allows businesses to make the most out of their time and finish projects faster, which is definitely a competitive advantage.
In conclusion, more and more enterprises are considering outsourcing their IT tasks and offshoring their work as a potential way to reduce costs, streamline their operations and increase profits.