Offshoring or nearshoring your software development needs might save your company money. Offshore software development is a big decision, so it’s important to weigh the potential benefits against the risk you take when you send work to another country. Here are some things to consider.
What is Offshoring?
Offshore software development involves geography. Offshoring means your work is done overseas. The United States has a high cost of living and U.S. employees demand high wages. Some countries have a cost of living that is significantly lower, so employees there work for less money. India, the Philippines, South Africa, and some Eastern European countries provide IT-enabled services at a cost savings.
Nearshoring is similar. It means outsourcing information technology processes across a nearby border. American companies might nearshore to Canada, Mexico, the Dominican Republic, or the U.S. Virgin Islands.
IT work can easily be sent to another country because it’s digital. There’s no product to ship and no manufacturing involved.
Pros of Offshoring/Nearshoring
Both types of outsourcing save businesses money on hourly rates. Here are some additional benefits:
- Businesses can offer more competitive prices when they send their work offshore and reduce operating costs.
- Foreign labor that leads to more U.S. sales improves our economy.
- Workers who aren’t comfortable with software development can focus on their areas of specialization.
Should You Consider Outsourcing Software Development? Try this FREE Online Assessment tool to help you decide.
Businesses often report they don’t end up with the savings they projected when they send software development jobs overseas. Here are some of the problems that commonly occur with offshored work:
Low up-front costs don’t result in long-term savings. Projects end up costing far more than other resourcing options because of managerial oversights and lower-quality work.
Time zone issues cause delays. when your technology needs are being met on the other side of the world, the people you need aren’t available when you need them. It’s difficult to set meeting times to discuss projects. International employees can miss deadlines. Sometimes you must wait until the next business day for a reply, and it bogs down the whole process. Prepare to work odd hours and wait for answers.
Language and cultural differences get in the way. Offshore employees don’t always have the business context and language skills to understand what you require. They may misunderstand the scope of the project in their original quote. Other countries may just have a business etiquette that doesn’t work with yours.
There’s no local support. When it’s time to integrate new software solutions, offshore companies typically hand over the product and leave you to sort it out.
They require extensive oversight to succeed. Most offshore companies work with multiple clients at once, so they can’t just focus on the needs of your business. They feel a lack of accountability and ownership. Your company will have to dedicate an employee to closely manage project expectations, deadlines, and stakeholder relationships.
Ready to discover which option is best for you when it comes to building your technology dream team? Check out this Technology Hiring Prioritization Tool. It will walk you through an assessment of priorities for your team – from budget to communication preferences – and offer you a team expansion recommendation based on your specific needs.