When it comes to software development, a competent in-house team becomes the lifeline of any business. However, hiring employees at your main office might not be the best solution. There can be various reasons, like the task not being significant enough to afford another talent on the payroll, or maybe itโs just a short-term project that requires temporary solutions.
However, this does not mean you need to compromise your quality of work. Rather, you need to find top-notch talent with more convenience that allows you to explore alternative options like outsourcing and offshoring development services. Here is what you need to know about offshore vs outsource before deciding your pick.
What Is Outsourcing?
The concept of outsourcing originated from the phrase โoutside resourcing.โ This refers to a practice of involving oneself with a service provider who would handle specific tasks for your business. This model allows both international and local contracting agents. When hiring outsourcing companies for managed IT services in Orlando, they can take up the entire information tech-related tasks and start working from scratch or address specific IT, system and security issues of your Orlando company. The key components of outsourcing include:
- Delegating products, business processes or projects to a third-party company
- The hiring company can select a team from its employees
- The service provider might continue to support the company even after a service period ends
- They can also halt the collaboration until the contract is renewed
What Is Offshoring?
Offshoring, on the other hand, involves transferring an organisationโs operations to an external company based in a foreign country. This strategy is effective for various reasons, including access to a larger workforce, enhancement of workforce equality and cost reduction. This approach is specifically helpful for corporations aiming for specialised skills and rapid growth.
In the case of software development, the process refers to establishing an offshore development centre in a faraway country and hiring developers from there. Whether for a single project or an ongoing project, offshore team management service providers allow you to scale efficiently and quickly without any need to build remote infrastructure.
Differences Between Outsourcing vs Offshoring You Should Know
Now that you know the benefits, you must also learn about the significant differences to help you pick the right fit. Here is a brief overview based on various parameters.
Expertise
Outsourcing offers access to specialised expertise and skills that might not exist within your company. By hiring talent outside your team, you can tap into a pool of professionals who are experts in specific outsourced services.
Offshoring, on the other hand, allows you to access specific knowledge and skills available in foreign locations. You might choose to take advantage of the specialised talent that is not readily available in your home country.
Control
With outsourcing, you get partial control between the service provider and the client company. You will have a significant role in executing and managing the outsourced services.
Offshoring allows the parent company to have a high level of authority, and decision-making power is completely secure within the hiring company.
Location
Outsourcing allows for a broader range of location options, including international and national agencies.
Offshoring is all about finding the right talent based on multiple factors like market access, regulatory environment and labour costs.
Communication
Outsourcing emphasises clear communication between the service provider and the client company, ensuring the achievement of goals and collaboration.
Offshoring might raise communication challenges due to cultural gaps, language barriers and geographical distance.
Time Zones
Outsourcing from different time zones might involve considerations of working hours. However, you can localise the impact to the service provider who maintains their own working hours while you maintain yours.
Offshoring presents significant time zone challenges and requires adjustments to work schedules and coordination. You need to maintain overlapping working hours between the provider and your own company.
Infrastructure
The parent company leverages the service providerโs infrastructure, including facilities, equipment and technological platforms.
Offshoring involves significant investments in setting up infrastructure at the offshore location.
Risk Management
Outsourcing involves having shared risk with the service provider as they take complete responsibility for managing the risk associated with their services.
Offshoring, however, exposes the parent company to certain risks, such as political instability, compliance and legal complexities.
Cost Control
Outsourcing offers cost control through contract negotiation and competitive bidding. You can hire remote employees based on the charges and experience.
Offshoring offers significant cost savings on labour costs as the cost of living differs in your country and the service providerโs location. You can take advantage of these lower wages and improve business processes.
Major Benefits Of Outsourcing vs Offshoring
Both of these models have distinctive advantages discussed briefly below:
Outsourcing
- One of the major advantages of outsourcing is that it offers flexibility, and you can pay your provider for the time they have worked, even if you employ them permanently.
- Another reason why outsourcing is a good choice is because of its efficiency and improved productivity. You can delegate your work to experts and avoid time-consuming periods of training.
- By outsourcing, all of your non-core functions get transferred to a third party, allowing you to free up your resources and focus on core business components.
- Outsourcing models are typically cost-effective and eliminate charges for administration and maintaining infrastructure.
Offshoring
- This approach offers scalability, where the service provider can create remote centres in various parts of the world to expand your business presence.
- You also get access to a vast pool of talent and scout and hire individuals with the right skill set.
- When it comes to ownership, with this model, you retain complete control over your core business operations and are responsible for training and guiding your team members.
- Cost reduction is another advantage as you hire talent from countries where the cost of living is low and get access to exceptional expertise.
Bottom Line
Whether you want to take up outsourcing or offshoring depends completely on your business needs. Both approaches have their own pros and can improve your organisational operations significantly.
ProHance is one such company that can help you with your organisational goals while allowing you to select the right approach. Since both models are distinctly different, there is no clear winner, and you can pick the right fit per your requirements.
