15 Myths of Offshore Outsourcing Finally Debunked

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15 Myths of Offshore Outsourcing Finally Debunked myths of offshore

With every industry and its related knowledge base comes a lot of myths. The outsourcing industry isn’t free of myths and misconceptions either. But most of these myths don’t have any facts to back them up, and they can often lead to bad practices.

Today, we’re discussing 15 myths of offshore outsourcing that don’t have any fact-based standing, and if you’re a responsible business/ project owner, you need to clear up the misconceptions.

So, let’s begin!

1. “Offshoring” and “Outsourcing Are Interchangeable Terms

While reading blog articles about outsourcing, you’ll often find that “offshoring” and “outsourcing” are frequently interchanged. The two terms are unique by their definition, and using them as substitutes for one another only misleads the reader.

Outsourcing is delegating certain business operations to an external team when the in-house resources are insufficient to complete the process. The process in question can be product development or other internal operations like administration, HR, etc.

While outsourcing can open up possibilities for additional efficiency by onboarding professional experts with prior experience, it can also raise concerns for data security.

Offshore outsourcing, or offshoring, is one of the many different models that exclusively refers to when the business process is outsourced to a team established in a different part of the world.

Offshoring, while being a part of outsourcing, doesn’t symbolize the entire concept of outsourcing itself. It’s simply an outsourcing model, while “outsourcing” refers to all the possible methods and processes, including the offshoring model.

2. Offshore Software Development Is Just For Cutting Costs

Offshore software development outsourcing isn’t just to cut down development expenses. Sometimes, the internal expertise simply doesn’t cut it, and you need to bring in specialized individuals who can move the project forward.

While it’s true that offshoring to countries with a lower cost of living can help reduce overall expenses, that’s not always the priority. Most of the time, product owners take the help of offshoring to bring in higher-tier professionals to work on their product regardless of the cost.

3. Final Product of Offshore Isn’t Good Enough

This idea comes from the fact that the PO often doesn’t have much control over the offshore team since it’s all based on remote communication. But as we can see from real-world examples, it’s entirely false.

Large enterprises like Google, Apple, WhatsApp, etc., frequently take the help of offshore outsourcing for completing crucial company operations, and we all know how successful these organizations are even as we speak.

While offshoring can cause slight delays in communication since not all team members can be online simultaneously, all the team members can still come together to create a fantastic product through constant feedback exchange and implementation.

4. Offshore Outsourcing Is Less Productive Because of Logistics

Even when offshoring is becoming more and more mainstream every day, many still believe that an offshore team is practically useless because of cultural barriers and time zone differences.

This statement would be believable ten or so years ago when team communication online was far more challenging; not everyone was geared towards remote work, and not everyone was well-versed in English.

While cultural barriers can still arise now and then, all professional teams still follow an industry-standard set of protocols that can help all the companies, both the client and the vendor, align their perspectives to cooperate.

As for time zone differences, most businesses prefer to hire teammates from a different time zone or a different region to provide 24/7 customer support.

Time zone differences can allow a development team to achieve 24/7 coding by having different developers continue product development from different time zones.

5. Offshore Is Only Suitable For Organizations With Tons of Capital

Offshoring is seen as a high-class procedure that only the largest companies can afford or even think of. But, of course, real life doesn’t work that way.

Small or medium businesses can also leverage the benefits of offshore outsourcing through budgeting and pre-planning their objectives. The range of offshore outsourcing isn’t only limited to product development.

In most cases, offshoring can help smaller businesses shine while saving costs since offshoring certain team members can cost less than onboarding a full-time employee using traditional recruitment methods.

Point to note here: offshoring isn’t an “instant win” trick; it’s a long-term plan that companies utilize to try and maximize their success.

6. Offshoring Compromises Data Security

The concern is very accurate considering the modern cybersecurity landscape, but outright claiming this happens every time is a mistake.

Data security is a big concern when offshoring to a team around the globe since classified company information, along with your intellectual property, can fall into the hands of malicious actors at any time.

Here’s the catch: It only happens if there aren’t enough data security compliances. A well-reputed organization will ensure complete data privacy by signing NDA (Non-Disclosure Agreements) and implementing security features on its systems.

When you partner up with a well-reputed agency, they ensure your data is in safe hands, and only people recruited to work on the project can view the relevant data.

7. Offshoring To Certain Countries Is A Complicated Process

This claim is partially correct since there’s no denying that different countries have different rules and regulations that you have to comply with, and it raises technological and logistical hurdles. However, that doesn’t mean the process has to be complicated every time.

Offshore outsourcing is for businesses that can’t complete certain tasks in-house due to either lack of expertise or resources, so they extend their team through offshoring for task completion.

Offshore team members are just additional members of your team who work on your projects based on certain terms and agreements. The process can be as easy as meeting and signing a contract based on mutual agreements.

8. Offshore Outsourcing Is Costing U.S. Jobs

It is a highly controversial statement that is more of a concern and less of a fact. When more and more companies focus on outsourcing their business operations, it’s a genuine concern for the local market, as they will have reduced opportunities, or the existing job force will lose their work.

The U.S. lost 2 million jobs over the last 20 years due to global trade but added 35 million new jobs in the last 10 years.

Many jobs aren’t materializing in the current economy, but it’s not due to increased offshore outsourcing. Rather, it’s because of higher efficiency through business automation.

9. The Cultural Barrier Is Huge

Different countries will have different cultures, and mixing different cultures in the same team will always be an issue. But that doesn’t mean the cultural barrier is so huge it will make the team ineffective.

We’re going through a modernization revolution, and many major favorite outsourcing locations have become highly adaptable to professional culture. A culture barrier exists, sure, but all the professionals have found their middle ground to operate on common grounds.

10. There Is No Proven ROI of Outsourcing

The reality is the exact opposite, as the ROI of outsourcing has been shown by many business analysts and industry experts time and time again. Even international marketplaces give outsourcing a resounding thumbs up for the following reasons.

  • Reduced employee headcount
  • Reduced employee overhead
  • Faster time-to-market
  • Better quality of the finished product

In some cases, these factors can allow a product to achieve an ROI of over 400%

11. Agile Is Not An Option When Offshore Outsourcing

A major requirement of agile methodology is for the product owner and all team members to collaborate on-site, and many think the remote nature of offshoring isn’t perfect for agile. But, of course, that’s not the case anymore.

Agile relies on high collaboration and constant exchange of information through communication. Thanks to a wide range of remote communication and collaboration tools, offshore team members can continue agile practices from remote locations, making the claim entirely void.

12. Time Zone Difference Is A Big Deal

One of the biggest complaints people have about offshore outsourcing is the time zone difference, which hinders development progress.

However, this claim can be proven incorrect on multiple grounds. The complaint comes from a situation where the time difference between the vendor and client is 10 hours or more. This difference can be used to the client’s advantage by constantly keeping team members online for continuous development and support.

If a business doesn’t wish to have a team with high team differences, they can easily outsource their projects or operations to countries with similar or overlapping work hours.

13. Outsourcing Is Only For Standalone Projects

A software project isn’t a single isolated project where the external team works with a one-and-done mindset. Software development is a potentially neverending process where the team simply can’t say goodbye once the development ends.

Offshoring teams aren’t just responsible for software development; they are also board for maintenance and updating the software based on customer demands once it’s published.

Aside from that, one client can sign a partnership with a vendor to work on multiple projects in close collaboration, meaning the team isn’t always there just for a single process.

14. Offshore Workers Are Frequently Underpaid

A wrong idea comes from the assumption that most vendors don’t pay their team members fairly, and most offshore team members are often underpaid by their vendors.

In reality, offshore outsourcing employees often are paid 10-15% more than what they would usually earn in that position as a full-time employee within their respective nations.

15. Offshore Developers Don’t Offer The Same Level of Skill As In-House Developers

One of the main goals of leveraging offshore outsourcing is to bring in highly skilled individuals to fill in the skill gaps of the in-house development teams. This alone should tell you how inaccurate the claim above is.

While you can find junior developers available for hire, many businesses take the help of offshore outsourcing to bring in experts they won’t afford or onboard through traditional recruitment as full-time employees.

So, no, offshore team members aren’t lacking in any skills. In most cases, the in-house team is lacking in skill, and the offshore developer teams are there to fill in for their shortcomings.

Are You Looking For A Perfect Offshore Development Team?

Now that you’re free of all the superstitions plaguing the offshore software development industry, it’s time to make your own offshore team.

Impala Intech can help you create an all-rounder offshore development team. We are a well-reputed provider of all sorts of software outsourcing services cost-effectively. With our direct collaboration with your in-house team, you can rest assured that your business is in good hands.

FAQ

Are Offshore Investments Primarily Used for Speculative Trading?

Offshore investments cover a wide range of asset classes, not just speculation.

Is It Difficult to Repatriate Funds From Offshore Accounts?

Repatriation can have complexities but is generally possible following legal procedures.

Are Offshore Investments Less Regulated Than Domestic Ones?

Regulation varies by jurisdiction, but many offshore centers have stringent regulations.

Is It True That Offshore Companies Are Frequently Involved in Fraudulent Activities?

Some are, but many operate legitimately, providing valuable services.

Are Offshore Investments Always About Maximizing Profits?

No, they can also manage risks, diversify portfolios, and achieve financial goals.

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