Outsourcing vs. Opening an Offshore Development Center
Global digitization is changing the ways businesses are done, expanding the horizon of possibilities. Now, companies can quickly find skilled specialists around the world and simply integrate them into their working processes. They started successfully implementing this hiring approach in the software development sphere, making IT outsourcing flourish like never before.
Companies are rethinking their hiring methods and it is taking various forms depending on the business needs of these companies. In this article, we’ll look into the two remote hiring models – opening an offshore development center ODC and traditional outsourcing model and find out when to use each to gain the most profit for software development projects.
What Is IT Outsourcing?
IT outsourcing is a broad term used for different types of remote hiring, including traditional outsourcing, hiring dedicated teams, staff augmentation, project-based outsourcing, and many others. The core idea of IT outsourcing is contracting a remote team of software developers or individual specialists to complete a certain amount of work. This can be fulfilling entire projects or stand-alone tasks according to the schedule and, in many cases, within a set budget.
Traditional IT outsourcing is mostly task-oriented. It means that when a project or amount of requested work is fulfilled, the development team ends its cooperation with the client. Therefore, this model best suits the companies that are aimed at middle and short-term projects or want to add some expertise to their existing in-house IT team.
Advantages and Disadvantages of Outsourcing
A wide range of companies from small firms to large enterprises opt for software outsourcing services for several reasons.
Software development, as well as software maintenance, is never cheap. For this reason, companies seek ways to optimize their expenses. Outsourcing offers many ways to do that. It can be:
- searching for cheaper software development rates – now, companies don’t have to hire locally; instead, they can search for software development specialists from an entire world; this way, those companies that operate in the US or EU can reduce their costs by hiring developers from Western European countries, Latin America, and other developing regions at much lower rates than in their own area;
- no need to pay benefits – in most cases, when a company hires an outsourcing team, they pay only for the work they do, avoiding the necessity to cover sick days, retirement benefits, and others; IT outsourcing companies assume their responsibilities for that;
- saving up on the office space and equipment – IT outsourcing companies provide their software development specialists with all the needed equipment and rent office space for their employees; this way, companies don’t have to acquire any software development equipment nor offices and care about their maintenance.
Focusing on Core Operations
Non-tech companies that need to build custom apps to enhance their business development don’t have to establish and hire an entire software development department. Instead, they can hand over this task to outsourcing IT professionals and focus all their resources on achieving the main objectives of their business and providing better services to their customers.
Meanwhile, if companies do have their IT departments, then they can turn to an IT staff augmentation company and quickly scale up the existing team to keep up with the workload at seasonal peaks. This way, businesses will be able to ensure the high quality of their services while supporting the consistent work of their departments.
Quick Access to the Top IT Expertise
Finding and hiring software developers is a challenging issue today. According to a McKinsey&Company survey, 87% of companies are experiencing a talent shortage and many more will face it within a few years. Therefore, finding professional tech experts can turn into a tedious, long-lasting, and expensive experience.
IT outsourcing companies, in their turn, offer businesses well-organized software development teams ready for work. They grow IT professionals in their hubs, gathering them into strong development teams with specialists who understand each other as well as the aspects of their work well. Companies don’t have to waste their time and money on searching and onboarding their own software developers. Instead, they can quickly hire a team with the needed specialists and start working immediately.
The traditional outsourcing model allows companies to flexibly scale up and down their software development teams depending on the project requirements. Therefore, companies have on board only those people that they really need at the moment. This also represents a viable way to cut down on the development costs as businesses don’t have to support the employees who are not loaded with the project work.
Just like any approach or model, the traditional IT outsourcing model has its drawbacks. Here are the main issues a company can face when opting for this model.
Lack of Project Control
When hiring a traditional IT outsourcing team, most of the time, companies hand over their pro