The pros and cons of offshoring: traditional vs offshore 2.0 model
Here’s a scary stat: 95% of companies in the tech industry can’t find the talent they need.
And what’s more worrying is you may be one of them.
If you’ve ever considered offshoring tech to overcome the talent shortage in your region, this guide is for you. After reading it, you’ll be able to analyse the pros and cons of offshoring, what model works better for your business and the key to finding elite tech talent overseas.
CTOs, CEOs, and engineering leaders, this one’s for you.
Let’s get started!
What is offshoring?
Offshoring means delegating processes or moving operations to a foreign country. For example, hiring a dedicated team of Indian developers for your US or European-based company.
There might be various reasons for hiring an offshore team. Perhaps you’re facing a talent shortage in your region, can’t find the right skills, or are looking for cost leverage.
Either way, when offshoring business operations, you’ll benefit from lower hiring costs and easy access to top talent worldwide, among other perks.
In recent years, offshoring popularity has faced scepticism because some vendors offer cheap and low-quality solutions for short-term collaborations. It’s crucial you recognise these offerings, which look irresistible at first sight, and learn to differentiate them from high-quality offshoring.
Or, as we like to call it: offshore 2.0.
But before moving forward with offshoring, you must understand the differences between the traditional model and offshore 2.0.
To help you do so, we’ll discuss the pros and cons of each model and why organisations are turning from a more traditional approach to an improved strategy that allows them to scale tech teams easily.
The traditional offshoring model
Traditional offshoring is a project-based approach where organisations collaborate short-term with external engineering teams.
For example, if you want to build a small team of software developers for a five-month project, the traditional offshoring model is a good fit for your business.
Developers on the traditional offshoring model execute tasks with the utmost commitment, but they won’t add extra value to your organisation as they work on a brief and temporary assignment.
These offshore teams are known for having a high engineer rotation, with developers working on one or more projects simultaneously and not focusing on one partner at a time.
Traditional offshoring pros and cons list
The image below illustrates the offshoring pros and cons for companies leveraging the traditional model.
Pros of traditional offshoring
These are the two main advantages of traditional offshoring:
Cost-effective tech talent
Offshore developers are more cost-effective than local or regional engineers due to different factors, such as their home countries’ cost of living and professional rates.
According to the tech salary insights portal Levels.fyi, a software engineer in New York earns €165,000/year on average. An equivalent engineer in Warsaw, Poland, receives €55,000/year.
That’s a staggering difference, considering value for money.
And their value goes beyond lower salaries.
The US tech talent shortage is forcing firms to look for qualified engineers outside their borders, and regions like Eastern Europe and South East Asia are becoming increasingly popular.
Not only because of their cost-effectiveness but also due to the strong work ethic and niche programming skills developers in these countries possess.
Round-the-clock operations
Offshoring gives companies a competitive edge: a global presence and 24/7 operations.
How? Businesses that offshore tech following the traditional model have development teams working in different time zones. When their in-house or management team is unavailable, offshore engineers step in to continue the work.
Let’s say your company is working to launch a new product and hire two engineers overseas to do the job. Despite working in a different time zone, they meet the short-term project’s requirements before the deadline.
Having a few hours hour overlap between your offshore team and your headquarters didn’t interfere with the resolution of the project. Instead, it resulted in higher productivity and a faster time to market.
Cons of traditional offshoring
Although offshoring brings many advantages, the traditional offshoring model has its faults. These are some of its disadvantages:
Execution over added value
Companies that offshore software development the traditional way care about quick product execution. Plain and simple.
But what if you’re looking for engineers willing to go the extra mile, innovate, and stay longer in your team? Then, traditional offshoring isn’t for you.
In the traditional model, software development teams have a job and perform it. It’s mere execution, and there’s no added value to it. Engineers often lack skills such as innovation or creative problem-solving.
Communication and language barriers
When you build a team in a foreign country, you risk hiring engineers who aren’t proficient in English and don’t know how to convey ideas accurately.
As a tech leader, you know how challenging it’s to foster effective communication within your company, yet it’s even greater with an offshore team.
And it’s not just about the language.
The engineers you hire with traditional offshoring can deliver good results but aren’t aligned with your company’s mission or values. They’re part of an external team with a clear mindset: completing a project and moving on to the next one.
Traditional offshoring emphasises a cost-focused mindset, prioritising cost savings over skills proficiency, fluent communication, innovative thinking, and cultural alignment.
Quality control issues
With communication and language barriers come concerns over the quality of the work.
Traditional offshoring follows a cost-centric approach, with companies hiring unskilled engineers with short experience in their field. These organisations want to build teams at a very low price, and what they get in return are engineers who don’t meet the standards of an ultra-competitive industry.
The development team’s lack of skills and quality can lead to miscommunication, incomplete deliverables, and inconsistencies in the final product.
High engineer rotation
Traditional offshoring generally involves hiring short-term engineering teams instead of dedicated developers.
The engineer rotation in these teams is high, with professionals onboarding and leaving your team after a few months of work.
Imagine you onboard and train a new engineering team for your company. Once completing their tasks, these developers move on to a new organisation, and the process repeats like a never-ending cycle: you’re always onboarding and training a fresh group of engineers.
The result? Inefficiency and compromised speed and quality in your business workflow. Engineers aren’t aligned with your company and provide no extra value in product development and innovation.
The offshore 2.0 model
Offshore 2.0 is the smarter way to go offshore, a better approach to offshore software development that emphasises long-term partnership and collaboration.
If you harness offshore 2.0, you’ll enjoy a team of hard-working top-notch offshore developers aligned with your company’s mission, culture, and values. These engineers are 100% committed and focused on your goals.
The offshore 2.0 model goes beyond cost savings and adds value to your organisation: offshore developers aren’t external to your business but are part of it.
Offshore 2.0 pros and cons list
The image below illustrates the offshoring pros and cons for companies leveraging the offshore 2.0 model.
Offshore 2.0 pros
Here’s a detailed list of the pros of the offshore 2.0 model and why you should consider implementing it in your company over traditional offshoring.
Access to the best talent, globally
Searching, finding, and hiring the best engineering talent worldwide. That’s what the offshore 2.0 model offers to businesses like yours.
Offshore partners who work under the offshore 2.0 model access top developers in Bangalore, India, the second-ranked tech ecosystem in the world for offshoring elite engineers.
Tech giants like Microsoft, Twitter, and Amazon have Research and Development Centres (R&D Centres) in Bangalore, a city that produces 90,000 new engineers yearly.
Contrary to traditional offshoring, offshore 2.0 sources the top 1% of the available talent. For instance, if you’re looking for Indian developers to join your company, you’ll get offshore developers with high English proficiency and the most in-demand skills in the market.
Read the full article at : https://thescalers.com/the-pros-and-cons-of-offshoring-traditional-vs-offshore-2-0-model/
