Debunking Some of the Most Common Offshore Outsourcing Myths
In recent years, a lot of companies have been turning to offshore outsourcing as an alternative to internal hiring and other business strategies. Many companies are said to be offshoring their software development like there's no tomorrow, but is this true?
Offshore outsourcing, or sending business processes to another country at a lower cost than the home country’s salary, has been a trend in recent years. But this practice is still widely misunderstood and fodder for several myths and misconceptions that are more often used as excuses, not to offshore instead of facts.
In this article, we’re going to talk about the common offshore outsourcing myths and the truth behind them. This is not to promote the industry but to also give small businesses the chance to grow, prosper, and succeed by simply trying offshore outsourcing.
Offshore outsourcing is more expensive
Offshore outsourcing is not more expensive. In fact, for many products and services, offshore outsourcing can be less expensive than domestic outsourcing. It all depends on the costs of labour, taxes, productivity, and overhead within each location (India being one of the lowest-cost locations).
What many companies don't realize is that offshoring or outsourcing to a provider in another country isn't necessarily going to be more expensive than only hiring locally. Many of these providers can provide the same services at a lower cost because they aren't paying for rent and other overhead costs like you do when you're operating out of your own office. Some even offer tax breaks since their company's headquarters are located in countries that have favourable tax structures in place.
With offshore outsourcing, the quality of work will suffer
Offshore outsourcing can be a great way to help your company save money. You may discover that your offshore outsourcing solutions are not only financially beneficial but also improve the quality of work done by your employees.
When choosing an offshore outsourcing partner for any project (or series projects), it is important to ensure that you choose the right one. Researching potential partners before selecting them can help you avoid problems down the road – after all, costs aren't always indicative of quality.
The myth that there's no way to know what your outsourced company is doing for you
There is no doubt that offshore outsourcing is the current IT business buzzword around the world. It's been talked about, coveted, and fought over for years now. But despite all this publicity about it, there are still quite a few myths out there that need to be knocked down before companies continue spending their money on expensive offshore projects.
Here's one of them: "With offshoring, you've got no idea what your outsourcer is doing for you."
Many people believe that since offshoring involves a company moving its work to an overseas location outside of the US or Europe, they have zero control over what happens at this location. That can't be further from the truth, however! Here's why:
1. Performance is guaranteed by offshore companies and signed via a contract. This means that the company you're offshoring to is held accountable for what they do and how they do it!
2. Remote oversight can be established through many different channels like video conferencing, instant messaging, phone, etc., so your offshore company has to stay in contact with you at all times during their workday! If they aren't responsive enough or give excuses when asked questions, you know something's up and can act on it immediately.
3. You have your choice of working out best-in-class management controls such as monitoring software solutions for potential deviations from the plan or metrics used to track your offshore company's performance.
With the above, you can rest easy that your offshoring provider will stay in line and do what it said it would. Otherwise, they'll have to answer you. It is a win-win situation!
The last and final one, the most common misconception about offshore outsourcing - "You can't trust them"
This is the most common misconception about offshore outsourcing - "You can't trust them". The truth is, the only reason we have such an objection to offshoring and offshore outsourcing is that we, as individuals, are not able to gauge or even control that trust.
But offshore outsourcing works almost exactly like outsourcing within the same country or continent. You cannot trust them. You just can't – but then, you shouldn't expect to be able to either.
Your competition will always find a way to cut costs and make more profits off your mistakes. Maybe it'll take them 3 months longer than what you were planning - or maybe that's how they ended up being bigger than you are now!
Offshore outsourcing works based on mutual interests, a win-win situation for both parties involved in the relationship. Also, we have to take into consideration that offshoring is a strategic decision from a business point of view and an objective for any company wanting to remain competitive; no company would outsource their engineering or development department like this if they did not have a reason to do so. The reasons are simple: save money, get more profit!
