What is offshore?
First things first, it is important to identify what offshore IT actually is. Offshore outsourcing simply put is when a company gets its services or product from another country. Techtarget.com defines it as “the exporting of IT-related work from the United States and other developed countries to areas of the world where there is both political stability and lower labor costs or tax savings”.
Benefits of Offshore IT
Offshore has been a growing trend due to the many benefits it offers. One major benefit is the cost. Offshore IT outsourcing can be extremely cost effective for companies. An in-house team for these services can be very expensive to maintain. In addition, in-house teams can be tiresome and stressful. Offshore outsourcing can alleviate much of this stress, allowing you to focus on other important business operations.
Another big benefit of offshore is liability. Offshore IT outsourcing minimizes liability because you are not directly liable for those employees. It also means you don’t have to invest in infrastructure. Technology and infrastructure can be major expenses for a business. So offshore allows your company to avoid those high costs and maintenance.
Risks of Offshore IT
Although offshore has many benefits, there are also certain risks. One major risk is confidentiality. It is important to do a good amount of research before using an offshore company. Make sure the company is legitimate so that you know your company’s information stays confidential. Doing your research also helps you figure out their quality of work. Some offshore IT companies lack experience which can hurt your business. While they may be cheaper options, it will show in their work.
Other risks/challenges arise from cultural differences. Communication can be very difficult if good processes aren’t in place. Time differences can also be a challenge for countries with opposite schedules. Culture clashes can also emerge of 2 other levels. One is the client corporate vs. offshore national culture. The other is differences in speed, style, decision making, and organizational structure.
Maximize Offshore Success
Here at Patriot Consulting, offshore IT is one of our specialties. Clearly defined job scope and requirements at the onset of offshore projects help ensure that the work completed meets your expectations. Outline the expectations of your service provider, along with specific deliverables and a timeline. You also need to match skill requirements with talent. When analyzing offshore service providers, consider areas of the world where talent is plentiful for your chosen skill set. Service level agreements and monitoring progress will also help make your offshore projects successful.
In addition, be sure to “follow the sun”. Globally based offshore talent requires that time zone differences do not create inefficiencies. Work schedules should be consistent among client team members and offshore service provider. You should also manage offshore teams as if they were your employees. Provide regular/ample feedback, constructive criticism and especially praise when deserved. Communicating regularly with your offshore team builds a strong relationship with trust and leads to success.
Finally, be financially smart but not cheap. You get what you pay for. Benefits of offshore outsourcing provides lower project cost but be willing to raise your budget for: greater technical skills, overtime or rush jobs that require quick turnaround. In addition, if you are working with an offshore development company that provides some project and employee management, you should consider paying more to that firm for being the liaison between your contractor and your firm.