Offshoring has always remained a difficult question in our minds every time we think of it or come across this term.We have millions of questions running in our minds on offshoring, “Should I need to really outsource to an offshore software development company?” “Is offshoring the right approach?” ,“ What if my expectations aren’t met?” An organization’s owner would want to ensure that the development process or whatever he has outsourced is going to be smooth. However, if the outsourcing strategy is executed effectively, the business process can actually become an asset over other organizations in the competitive landscape. Let’s understand what actually is offshoring, and what is required to get started with the process.
Offshoring is basically moving or relocating various operations/services of a company to another country for reasons such as lower labor costs or the economic conditions are more favourable in that country, or the raw materials costs less in the other country, or the other country’s tax rates are lower, etc. So, the key reasons why a business would choose outsourcing will come down to three major departments which are:
- COST because goods/raw materials and services provided might be far cheaper from the country where the product is manufactured. This not just duplicates their presence but the profits they make are also significant.
- TAX & TARIFFs because certain taxes are relieved in some countries or there might be loopholes in tax regimes in many countries that can allow companies to generate sound savings and import goods/products for use that are relatively cheaper.
- CONTROL because a company would choose to offshore just so that they don’t let go control of part of their production to a third party.
However, relocation of various operations/services might sound easy on paper, but it’s not that smooth as it sounds. To ensure that the offshore software development company brings the expected results, including cost savings, some necessary steps have to be considered:
- Choosing the right vendor: Success is highly dependent on the people you choose for offshoring. How much of technical expertise do they have? How well they know your industry? All these questions must have positive answers which will eventually lead to success.
- PLANNING is the key: Defining the mission, vision, goals, objectives and deliverables is indeed very important, and before any member of an offshore team is selected, it’s equally necessary for that person to understand all of it. If all these things are at place, the team will be stronger and the goals will be easily achievable.
- A well-defined SLA(Service-Level Agreement): “Good fences make Good neighbours.” Major role of a SLA is that it allows managers to monitor the quality of the project, cost and time with proper space for adjustments if the project falls behind or quality lags.With the help of a proper SLA, you can set certain benchmarks which in turn enables proper allocation of resources much ahead of its schedule, basically assisting in an effective process creation and helping the team drive towards a common goal.
- Establishing LOC(Lines Of Communication): Email, chat, phone, videoconferencing, in this era you have ample amount of options to communicate, and communication is the key here. These LOC can be established and planned while discussing plan-of-action and deliverables.
- The technical TALKS: One of the most general misunderstanding we hear about domestic and offshore teams is the deployment environment. To resolve that, we have a term which is popular among IT professionals, known-as, KT or Knowledge Transmission. The strategy or the coding or the variables used by the domestic team maybe missing in the overseas team. A clear knowledge transmission has to happen during the project kickoff, so that all the team members understand the delivery parameters.
- Trust: Trusting the offshore team members with the responsibilities assigned to them is really important. However, you may also take time to verify their references and expertise. This helps you to gain insight of what’s happening in the team, also if you have hired the right resources for the project as required. If everything goes as expected, you might enhance your collaboration and communication with the team.
- Keep In Touch: Out of sight, out of mind, losing touch with offshore teams often has negative outcomes. It’s important to schedule at least a meeting per week with the offshore managers and leads, ensuring that the expectations are met, providing an opportunity to clear barriers to success.
If the above factors are in place and an effective communication is there between the domestic and the offshore managers, success is bound to happen. However, offshoring improves flexibility of work and productivity, there might be some social and cultural difference in work culture, communication problems(language or way of talking), security issues(security breaching & data integrity). One needs to take care of this before bringing offshore team on board.
Universally , the future of business is expected to come in the world of offshoring. While there are many other countries that provide effective cost savings and skilled manpower in offshoring, what’s important is the strength and passion in establishing a high performing organisational culture. The mission of offshoring is to build value in your business by ensuring progressive growth in your business performance in the long run.