Building an offshore team takes time and effort, but its benefits are inimitable. The value and savings it offers a host organization makes offshoring a vital aspect of the modern global business model. In the IT industry especially, offshoring makes great economic sense, in addition to its several indispensable benefits. A forecast by the Hackett Group confirms that by 2016, 750,000 more jobs in finance, IT, and other key business services areas will be offshored. In Europe alone, around 1.2 million jobs will go offshore by 2015, according to a Forrester study. Even the Fortune 500 companies have been relying on offshore services to develop or maintain software—a report by NASSCOM and the Gartner Group has revealed that 40% of these enterprises are outsourcing varied aspects of their software development.
The reasons for the popularity of offshore resources
In the early 1990s, the offshore model began to catch the fancy of American enterprises simply because of the cost savings advantage; and although, at first glance, affordability appears as the only major driver for this choice, a closer look will reveal that the reasons are larger. Cost, in fact, has become just one of the many other important aspects of the offshoring practice.
Here’s a closer look at the all the benefits of having a dedicated offshore team:
- Cost efficiency
The Ernst & Young – Outsourcing in Europe study states that cost efficiency is the number one reason why European countries outsource IT services, especially for application development, IT helpdesk, infrastructure and testing. Having an offshore team saves big bucks in comparison to hiring, housing, and training your own employees. When you can expand your team without the nitty-gritty of expanding your organization’s facilities and equipping the newly hired staff, the costs automatically stay under control. Because the vendor provides trained manpower at call and has infrastructure in place, and offers both at a much lower and fixed cost structure, without the complications of hidden overhead expenses, offshoring begins to make a lot of (financial) sense. - Reduced time to market
A significant advantage of having a dedicated offshore team is the assurance of timely delivery. When you have a team that is devoted only to your product development, the time to market is reduced notably. An agile approach, coupled with seamless communication and collaboration, ensures that your offshore team is always on track and there are no delays in deliverables, increasing your competitive edge in the market. - Access to a skilled labor pool
Hiring personnel with the right skills is a long drawn process. Most organizations contend with shortage of domain expertise, and the need for training in specific technologies poses a huge challenge. However, this problem can be easily tackled with offshoring where the vendor company has already made investments in the right talent pool. Availability of a dedicated skilled team cuts out the chase for technology, methodology and people, helping in kicking off projects sooner than you would have anticipated. - Easy scalability
Ramping up or down a team was never so easy! Scalability is one of the most important aspects of offshoring. It facilitates growth or downsizing without the hassles of resource mobilization. Scalability offered by an overseas company can especially be useful in critical situations, when resources need to be mobilized pronto and projects deliveries scaled up. - Transparent relationship
A dedicated offshore team will not be a faceless entity to whom you shoot off projects without any clarity on responsibility and accountability. With open and easy communication lines, you will be aware of who exactly you are dealing with. Internet, voice and video conferencing facilities allow you to touch base with your offshore team at your convenience, giving you complete control over the business processes and delivery timelines. You can directly manage the resources closely and ensure that the workflow is efficiently aligned to the expected deliverables through project management and regular updates.
Negating the “risks” of offshoring with India-Advantage
The A.T. Kearney’s 2014 Global Services Location Index (GSLI) has discovered that Asia dominates as the most sought after offshoring destination. India is on top of the list and remains unbeatable, with all-rounder strengths—financial feasibility, talent pool availability, and positive business environment.
Many organizations worry that cultural and language differences and diverse time zones can cause operational difficulties, not to mention the fear of losing control over data and intellectual property rights. However, in India all these factors are suitably taken care of. Besides being familiar with western culture and style of working, Indian personnel use English on professional platforms, besides being able to work round the clock, giving your organization a head start in many ways. As far as data security and intellectual property rights are concerned, the regulations are highly stringent, with multi-level non-disclosure agreements that are internationally enforceable.
Running your dedicated offshore team successfully can be easier than you think. More importantly, its benefits are unsurmountable. Of course, communication keeps a team running smoothly; be it onshore, nearshore or offshore. While communication lines are becoming increasingly easy to set up, it takes real time efforts to make it effective. Engage with your offshore team and treat them like a part of your company. Challenging them and giving them the opportunity to display their skills will bring in the true essence of a partnership, making your offshore team a success and keeping them in line with your long term goals.
