In today’s competitive world, businesses primarily focus on their core competency and in addition, delegate less critical business tasks to a third-party vendor. This enables them to focus their energies and resources on the key aspects, or simply leverage third-party expertise required for a particular product or task.
Sometimes businesses opt for the third-party vendor in their own country i.e., onshore outsourcing while other times, the third-party vendors are situated in foreign lands, which is termed as offshore outsourcing. Businesses do the latter to take advantage of the lenient laws of the land.
Let’s break down the term to make offshore outsourcing services more comprehensive for the readers.
Table of Contents
What is Offshore?
Offshore means being situated in a foreign country, at some sea distance from the shore. In business, offshore means being located or registered in a foreign land, especially to leverage lower taxes or costs or less stringent rules and regulations.
What is Outsourcing?
The practice of outsourcing simply involves contracting out a business task or a particular section of the task to a third-party vendor. This practice is trending today as businesses usually undertake it to reduce variable and operational costs or when they need to focus on their core activities. Therefore, they outsource the less crucial operations to outside organizations.
What is Offshore Outsourcing?
One of the models of outsourcing, Offshore outsourcing refers to the strategy where a business hires a company situated in a foreign country for a particular set of tasks. Once both parties agree and acknowledge the agreement, the outsourcer, and the contractor, the latter deliver the agreed services remotely.
Offshore outsourcing can involve a variety of services such as designing and developing a website, software development, DevOps, Maintenance and support of a project, and other such technical services. Technical innovations have made it so convenient to hire and contract out tasks to any company or organization around the globe, enhancing user experience and business growth.
While it is a common conception that businesses opt for offshore outsourcing only to leverage cheaper resources, however, often such companies go for offshore outsourcing services because they also seek the right expertise, extensive domain knowledge as well as relevant experience.
Ways of Offshore Outsourcing:
1. Development Centre
An offshore development centre is an individual office with a team of engineers located abroad. A business or company branches out in another country, equipped with a pool of talent and leveraging lower costs.
Deemed as a subsidiary of the main, parent company, a lot of tech companies are setting up their offshore research and development centres with a belief that offices with their people in foreign lands bring in more benefits than the conventional way of outsourcing.
Businesses view it as an upgraded service or solution, especially in the IT sector. The country where the offshore development center is established typically has much lower standards of living compared to the parent company’s location. Therefore, businesses rely on the lower costs of resources.
2. Outsourced product development
While in the case of offshore development centres, a business establishes its research and development centre abroad, outsourcing product development means hiring a company located in a land other than your own, to carry out end-to-end or particular phases of a product development cycle. When the product’s development is undertaken outside the home country, it is known as offshore outsourcing product development.
There are four types of offshore outsourcing:
Information technology outsourcing (ITO)
Business process outsourcing (BPO)
Offshore software development
Knowledge process outsourcing (KPO)
Offshore outsourcing allows businesses to unlock proficiency, in addition to the expertise of a talent pool across the globe. The cost of opting for outsourcing product development to an overseas company is lower than hiring a local product development service provider. For instance, businesses belonging to developed countries like Canada and the USA hire offshore companies from developing places like India and China to get optimal results at relatively lower rates.
Outsourcing helps business access proficiency and since the task that is outsourced is the core competency of the service provider, they would give the most optimal results. Offshore outsourcing services further help business to solidify their core competencies, reduce the work stress/ workload of in-house teams and complete the project on time at a faster pace.
By hiring an offshore outsourcing service provider, business identify their key differentiators and work hard on them to create a firm position for themselves in the marketplace.
For example, few development partners have extensive experience in specific vertical such as E-commerce. With their expertise and experience of working with many clients, they become capable of not only smooth sailing through their work but also share industries’ best practice that will be very fruitful for your business.
2. Cheaper labor
The costs of living, and wages in developing countries that act like offshore companies for developed companies, are relatively low and hence assist the latter with outsourcing services for less costs. For instance, a good developer may cost more than 100 dollars per hour in Canada and USA while a developer with similar skill set may cost anywhere from 30 to 80 dollars per hour in India.
Furthermore, many foreign companies benefit from the highly skilled and dedicated talent found in these countries, which is an added advantage.
3. Skilled Workforce
While in most cases, businesses opt for offshore outsourcing services to get skilled resources from developing countries at lower rates on board. There are other times when businesses also go for offshore outsourcing services to leverage the expertise and industry experience of a third-party vendor.
Noida, India is very popular and extensive market for staff augmentation developers as companies here mainly work with mid-size companies and startups and provide them with dedicated developers, when required.
4. Increased Efficiency
Sometimes internal team members lack the skills and expertise to deliver the new project. It’s very difficult for developers to keep updating themselves with new skills and as a result of all, efficiency is sacrificed. Often a dedicated skilled resource in a specific tech stack can, in addition, help deliver new projects on a super-tight deadline.
5. Around-the-clock support
Hiring an offshore outsourcing team means constant, round-the-clock support offered by experts. In fact, the internet has successfully connected the globe and widened the standard business hours. Thus, it is implied that if any major problems with technical services are faced by the client, they can be resolved immediately by getting in touch with the developers at any hour.
In case, where you need to provide support for the Graveyard shift, you may contact someone from a different country and time zone that can help you and ensure they take the headache of providing support during grave hours.
6. Less Regulative Bottlenecks
Offshore outsourcing services also allow businesses to benefit from flexible or less stringent laws of land binding the overseas outsourcing service provider company.
Offshore Outsourcing is a business practice with numerous and far-reaching benefits. There are challenges to this strategy but the major one is finding a reliable outsourcing partner. However, with a few points kept in mind, a good outsourcing partner could be found. With offshore outsourcing services, ROI is quick and high and businesses gain a competitive edge.
BigOhTech is one of the most sought-after offshore outsourcing service providers. Globally recognized, we ensure that our clients get world-class services and products. Our offshore development center seats a pool of some of the most highly qualified and specially trained experts, supported by the latest, well-designed IT infrastructure.
BigOh is also a one-stop solution for all kinds of outsourced product development requirements. With expertise in mobile technologies, software development, and cloud computing, BigOhTech acts like an incubator for companies to develop and flourish.
Speedy delivery, meeting up quality standards, and cost-effective product development are some of our strengths, and also the three most important components required to run a successful outsourcing product development company. Avail our services today and accelerate your business growth! g. drdd trdgfc rdsjfd trt vtesetsg
Q1. What does Offshore Outsourcing mean in business terms?
Offshore outsourcing in business teams means hiring a third-party vendor to carry out business processes, system services, product or software development, or to contract out parts of a business task.
Q2. How does Offshore Outsourcing work?
Offshore outsourcing involves identifying the business needs, defining the scope of work, followed by asking for a proposal, selecting a vendor, negotiating and procuring the contract, project initiation, service delivery, and exiting the contract.
Q3. Are there any risks in offshore outsourcing services?
Offshore outsourcing has its pros and cons. While security risks, lesser control, and different time zones are some of the drawbacks, they are not major bottlenecks and can be easily worked around.
Q4. How to find a good offshore outsourcing company?
A good offshore outsourcing company should be one with considerable industry experience, domain expertise, and up-to-date IT infrastructure. The development team should be skilled and proficient. It should have the potential to innovate and deliver on a timely basis. Furthermore, it should be aligned with your business goals from the very beginning and provide support throughout the life of a product or keep your application or software up and running.
Q5. Why do most companies prefer India for offshore outsourcing?
India is the top choice for offshore outsourcing as it has the best IT talent, skilled and motivated IT experts, and offers low development costs making her an attractive destination for offshore projects.