Offshoring vs Outsourcing In The IT Industry

If you are ready to expand your IT company and take on more work, you might be considering offshoring vs outsourcing. Given changes in the global economy and recent advances in technology, both of these strategies are becoming more and more popular. There’s definite benefits to both of these strategies, but which is right for your IT company?

What is offshoring and outsourcing?

Both of these strategies are based on leveraging the experience of outsourcing or offshoring companies to engage additional IT staff, often people who are specialists. These new staff are qualified and experienced and have been vetted thoroughly by the hiring companies. It’s a good way to reduce your recruitment expenses and hire employees for additional IT work.

Why do IT companies use outsourcing?

Outsourcing is popular with IT companies that don’t have the resources to manage a project themselves, so they outsource this work to a third party company. This company is located and hired via an outsourcing company who specialise in finding the right staff for the job. The hired company takes control of the project using their own employees and resources to complete the work.

Outsourcing pros and cons

The main advantages of outsourcing is that saves IT companies a significant amount of time and money, otherwise spent on the resources needed to complete these additional projects. As you can imagine, it’s costly to purchase new IT infrastructure and can be stressful finding the right specialists for the project. On the flip side, your IT company loses control over the project, because it’s now in the hands of the outsourced company. So if you want to expand your business and keep projects in-house, outsourcing isn’t the best strategy.

Why do IT companies use offshoring?

Offshoring is different from outsourcing because it allows IT companies to move some of their operations overseas, reducing their costs and leveraging local expertise. This is a strategy that’s becoming more popular with many IT companies, regardless of their size, simply because it makes good business sense. It works because your IT company can contract a third party IT company in another country to perform various tasks, leveraging the overseas company’s lower operational costs.

Offshoring pros and cons

Offshoring benefits include reduced operational costs as work is relocated overseas, allowing your core staff to refocus on your company’s main business. Capacity issues are also resolved, service quality enhanced and your company gains access to intellectual capital and talent pools that may not exist locally. The only real disadvantages of offshoring relates to different time zones and language issues. However, both of these can be overcome quite easily, particularly if you contract to offshoring companies in the Philippines where most people have a high proficiency in English; they are also willing to work unusual hours to get a job completed.

So which strategy is best for your IT company?

If you want to take on a few additional staff without the responsibility and costs of hiring and employing them yourself, then outsourcing is your best strategy. However, if you want to expand your business offerings at a much lower cost than in your home country, it’s clear that the offshoring advantages mentioned above make it the clear winner. Companies that decide to leverage the offshoring model tend to benefit both short term and long term from reduced costs and access to specialised IT staff.

To find out how you can leverage these offshoring benefits for your IT company, contact Outsourced today.