Guide to IT Offshoring strategy in 2022

IT offshoring is a proven strategy. Globally, IT enterprises have relied on offshoring for software development, testing, network security, etc., and partnered with countries that offer the resource, cost, and operational advantage. India is a global leader in this regard. The country is the first IT offshoring choice for companies from the west!

Nevertheless, if you've been planning to shift your IT operations or projects to another country, this IT offshoring guide that touches on the following aspects can help.

What is IT Offshoring?

IT offshoring or offshore outsourcing refers to shifting the whole or part of IT
operations to an external vendor in another country. Companies usually do it when,

  • The cost of IT operations in their country is relatively high
  • There aren't enough resources to handle a particular task in their country
  • Operational, employment, administrative, etc., costs hamper profitability
  • It isn't their core expertise, and when they want to focus on their business

Benefits of IT Offshoring

Many already know the benefits of IT offshoring. But for those who would want to have a clearer idea of how IT offshoring can benefit them, here are five quick ones.

  • Reduced Operational Costs

IT offshoring to preferred destinations like India enables companies to save up to 15-20 percent (figures may vary) of the operational costs. The most significant factor contributing to these savings is resources available at a lesser price. The per-hour rate of an Indian developer is lower than that in the US, Canada, and the UK.

Besides, companies don't have to look after employee administration and benefits like insurance, taxes, etc. One cannot forget that such countries overheads are relatively lower than those in developed countries.

  • Availability of Top Tech Talent

Offshoring countries have abundant technology talent, which is in several million. For instance, India is home to over five million IT professionals! The number is way higher than the US, which has nearly four million.

  • Extensive Experience

Countries that undertake IT offshoring projects have extensive experience across the technology realm. They have highly experienced resources that can be assets while handling tactical challenges and supporting strategic decision-making.

  • Reduced Time to Market

Dedicated resources working on a particular project in a foreign company can help reduce the time to market or, in other words, expedite the production part. It can help companies gain a competitive advantage over those who in source everything.

  • 24/7 Operations

Offshoring enables companies to do what they cannot do efficiently in their home country. Operating 24/7 is one of them. Offshoring helps companies continue their operations round the clock and expedite production. Of course, it incurs a relatively high cost. But if a company is willing to pay, it can help them do more in fewer days.

IT Offshoring Models

Let's now look at some common IT offshoring models. Choosing the suitable model is crucial from the viewpoint of optimizing your investment. Usually, the offshoring company can help you choose the right one. But knowing some potential offshoring models can help you know what to expect.

  • Project-Based Offshoring

This engagement is confined to a single project. But it is practically viable for a long-term project, where you gradually realize the savings. For short-term tasks, it wouldn't be feasible to move operations to another country and bring it back once the project ends. Besides, you wouldn't want to opt for project-based offshoring for highly complex projects, where knowledge transfer and finding resources could be challenging.

  • Dedicated Offshoring Team

Working with a dedicated team involves building a remote team that works exclusively and full-time for you. It is beneficial for companies that have a lot to accomplish and look to build long-term engagement. Hiring a dedicated team allows you complete control over the project and more flexibility concerning scalability.

  • Offshore Development Center (ODC)

You can also build an ODC, where you develop a full-fledged IT team in the offshoring country. It is an effective model for large IT companies and startups, as it helps them establish their presence in another country. Adopting the ODC model allows development teams to operate under the client company's brand name. Companies don't have to deal with third parties and potential IP conflicts in such a model.

IT Offshoring – Challenges

Potential challenges encountered while offshoring IT operations include the following.

  • Finding the Right Resources

Finding and hiring the right resources is a significant challenge. The right talent
acquisition strategy and access to a broader talent repository are crucial.

  • Managing Cultural Gaps

Offshoring to a foreign country involves massive cultural differences, especially when it is about shifting operations from the west to the east, which is often the case. But proper training and empathizing with each other in the initial days can help.

  • Handling Time Differences

Time differences could prove to be a challenge and create chaos. But planning work appropriately can help leverage time differences and optimize productivity.

  • Project Control

Although offshored, companies would want to have complete control over their
operations. It depends on the contract terms and frequency of project monitoring.

Optimize Your IT Offshoring Investments with Trinesis

We hope this guide helps you make the right IT offshoring investment decisions. If you want to outsource software, mobile app, cloud application, web development, etc., to an experienced IT company in India, we've got you covered!

Our value proposition enables companies to optimize their IT offshoring investments via an organized product design discovery approach

Please write to +1 707-760-7730 or to learn more about our IT offshoring solutions.

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