What is offshoring, what is the difference between offshoring and outsourcing and what are the opportunities of offshoring?
Offshoring, near shoring and outsourcing
One of the most used terms, besides scrum and agile, in ICT nowadays is offshoring. But what exactly is offshoring and what is the difference between offshoring and outsourcing? This article is the first in a series of articles describing the world of offshoring and the benefits of offshoring to your business.
Simply put, by offshoring as well as by outsourcing, the company is contracting out work by a third party. Outsourcing is contracting out the work to another company in the same country. Offshoring is contracting out the work to a division of your company or to another company in another country. But if this country is on a continent abroad, it is called offshoring. And if this country is located at the same continent, it is called near shoring.
Benefits of offshoring
Common parts of outsourcing are cleaning, manufacturing and help desk services. In addition, you can outsource every part of your business: accountancy, ICT infrastructure, software development or even the technical drawing of your architectural or technical design. But why should you offshore some of your capacity? We will focus on software development, our core business and the field we excel at.
Cost savings, efficiency profits, availability and flexibility are the most important goals of outsourcing your work.
When offshoring a part of your software staff, you only pay for the hours worked. Thus illness and holiday leaves are often not being charged. You do not need to take care of workspace and equipment or taxes related to employment. Depending on your country and the country you would like to offshore to, it could deliver you a benefit of up to 65% of your daily employee costs.
Reducing your employee costs with 65%, you can hire three times more personnel to the same project. Which delivers a higher production, and thus efficiency profits, as a positive consequence.
Availability & Flexibility
Next goals of offshoring are availability and flexibility. Often related to each other. In Western countries, highly educated software developers are hard to find. A big gap between demand and supply raises the salaries and other employee benefits. Therefore a suitable and cost effective solution is offshoring these positions to a country where plenty of these developers are available.
If the software development at your company is subject to a variation in workload, it is a waste of money to hire software developers on long-term contracts to have the work done and to keep the knowledge in-house. Offshoring these parts of your development on a project contract with one and the same company, ensures your work to be done in the agreed time. It also gives you the possibility to claim your own developers for the next projects. When they finished your work for the time being, they can be deployed on another project of another company.
Maximum flexibility, maximum knowledge preservation, minimum costs. Increase and decrease your staff was never so easy.
Business development related to offshoring
How many times do you and your business development team come up with new ideas? Ideas worth to develop and deploy, but with one big problem: no money and/or no capacity. You can realize these ideas with less costs and higher productivity, without confiscating the valuable time of your employees. Just by offshoring this capacity. Your employees finish their jobs within time. You developed new business. Business growth is easily realized.
You are a creative and entrepreneurial type and you start a new business and you need some software development capacity to develop your ideas into a product worth selling. You can not invest in a team of software developers due to a lack of money. A flexible contract with an offshore company can deliver you the amount of software developers you need to accomplish your targets. Start with one fte and finally grow to a complete team of 10 fte? Offshoring can make this happen. Within your time, budget and competencies.
In conclusion, above mentioned cases are only two of the many we regularly deal with at Global BrainForce. If you want to learn more about offshoring and the possibilities for your business, please do not hesitate to contact us by mail or phone. We would be happy to help you grow your business.