What is the benefit of offshore workers
The benefits of offshore teams for software development
Today's software companies invest a lot of time, effort, and capital to be at the forefront of their industry. However, as the market becomes more and more saturated, companies have no choice but to try to stand out from the crowd with powerful, innovative and relevant software solutions. However, if finding suitable developers back home is proving difficult, building an offshore team can be a solution.
But that's far from easy. The competition for recruiting local talent is fierce. As a result, most companies are left with less skilled (or less motivated) developers who don't live up to their expectations. The effects are lower quality results and less reliable development.
But it's 2019 - the competition for local talent is no longer the only option. More and more companies are relying on offshoring in order to set up dedicated teams consisting of first-class software developers who are fully integrated into the business despite the location abroad.
It is rapidly becoming the most cost-effective, practical and sustainable solution for the industry.
We see this blog as a useful, meaningful comparison of internal development teams and offshore teams. Specifically, we will analyze how the two options fare for the three decisive factors. That’s the cost, the talent, and whether the task will be completed when it is desired.
First things first: what are the costs?
Software engineers are some of the highest paid workers in the world today. So it shouldn't come as a shock that the decision to go abroad is largely determined by the lower costs.
In the US and Western Europe in particular, hiring local talent means significant business expenses. If you want the best talent, you have to offer them premium salaries as well. However, the salary is only one aspect. In addition, there are the costs for the entire recruiting process (and sometimes generous fees), the office space and the facility, employee-oriented additional services such as health insurance contributions and many more.
If you're planning on building a full in-house team including senior developers, the amounts can be intimidating. The advantage of this variant, however, is that you can be pretty sure of what you will ultimately get for your money.
It looks a little different if you opt for the offshore variant. The cost of living in countries like India and Ukraine is significantly lower than in the US and Western Europe. This fact also correlates with the salary of the people living in these countries. It is therefore significantly cheaper to hire workers of equal quality through offshoring than to do this in your own country.
Note that these are not poorly trained programmers with no demonstrable experience, but rather equal workers. Cities like Bangalore offer emerging and talented IT communities. The profession of software developer is a very popular choice among young people and no less desirable than a doctor, lawyer or engineer, for example. So when you work with the right offshore partner, you can always find the exact developers who meet or exceed your expectations - at a much lower cost.
All the costs actually associated with the personnel, such as health insurance, recruitment and office space, are then no longer worth mentioning. Either they are greatly reduced or they simply do not exist.
So what's the catch? Then why doesn't every company relocate its software development to India and benefit from the advantages? It's up to the perception.
As mentioned earlier, home recruiting is beneficial because you can rely on the talent of the people. If you've never done building an offshore team, it's not far to assume that the after-sales costs of poor work or poor reliability could outweigh your financial savings.
So let's examine this.
Access to talented and forward-thinking developers
When you hire new employees, it is usually because your company is growing. Not much, maybe, but enough to require additional internal capacity.
And if you are a software company looking to hire well trained and motivated developers at all levels, then you may encounter some obstacles during the process. As it turns out, the complex recruiting process in itself is reason enough for many companies to operate offshoring.
Scarcity and cost of local recruitment
We have already examined how expensive salaries can be for western companies. Unfortunately, that's not the only cost of building your team. The recruiting costs are usually between 20 and 35% of the annual salary of your new employee, sometimes even higher.
The real problem (and one of the reasons recruiters ask so much) is that Shortage of locally available talent. Even in big cities like Paris, there tends to be a shortage of quality software developers who can be hired at reasonable costs. Paying full-time workers at $ 60-100 an hour is way above most corporate budgets, but this is some of the demands these days.
And there is another side of the coin: what can you actually afford if you can't pay the really good developers?
The power lies entirely in the hands of the developers themselves. They represent a scarce commodity and can simply choose their employer. If your company isn't exactly that most exciting tasks or the most lucrative contract then why should one choose you? The consequence of this is that they have to spend considerable sums on just average developers.
How can you escape the scarcity and unaffordable prices?
The abundance of extremely well trained developers in India is amazing. India produces 1.5 million new developers each year and they flock to technology centers like Bangalore after their education. They all speak fluent English. Language barriers with Indian developers are inevitably only experienced by companies who pay freelancers a few pennies for poor quality. It is one of those offshoring myths that are not at all relevant in reality, provided you invest in a first-class and globally relevant center for software development.
When you work with the pros, you will have completely opposite experiences.
Both software development and English teaching are heavily promoted by the Indian education system. The result is not simply programming geniuses without any kind of soft skill. The developer skills are very well balanced. You are able to manage your projects independently and can integrate perfectly into teams of western companies. That also leads to our last point ...
Can offshore teams really work?
The following is probably what matters most. Can my company function smoothly in day-to-day business if half of my developers work thousands of kilometers away in a different time zone?
Let's start with the most obvious. Working with an internal team is definitely easier. Everyone is within reach and everyone works at similar times. In an ideal world, this is what any company would prefer.
But in an ideal world it would also be cheaper and easier to employ people in Western Europe and the USA! Since we have already established that this is not always possible, it is important to specify why offshoring is the next best alternative.
"But what if they don't work properly?"
It is a legitimate concern that unsupervised, no team of new hires will invest 100% of their work in their assigned tasks. But this assumption forgets a crucial principle of offshoring. The new employees are a fully integrated extension of your internal team. Including management reporting directly to you.
It is your work culture, your company ethos and your rules that all these new employees have to adhere to. Offshoring is not like outsourcing, where you pay freelancers to do unimportant tasks. We are talking about full-time, well-paid specialists who go about their work with passion. So if it works at home, it will work offshore too.
How can you ensure that offshore teams function well on a day-to-day basis?
We covered this topic in depth in another article (8 Modern Strategies for Offshore Teams to Work in 2019). We will briefly discuss the essentials again here. Your first job? Implement good communication and task planning tools if they are not already in place.
If you only share one office as a small business, you may be able to get away with using modern planning tools like Slack, Asana, or Skype. We don't recommend it, but it can still work for small teams. However, if you decide to set up an offshore team, there is no more room for the “will be up and running” setting at the latest. Then you are dependent on a structure that is clearly recognizable for everyone in order to guarantee a smooth process.
Instant messaging, video calls, task scheduling. There are many simple processes that are easy to implement and already massively optimize every area. Your offshore team will be handpicked by you. You only get the best. Use the right tools, make sure everyone on the team understands how to use them, and everything will work fine.
It is also helpful to incorporate a "If you're not sure, don't hesitate to ask!" Culture. It can help overcome initial hurdles.
And that's all. If your business is stable, your team is happy, and you have no plans to grow rapidly anytime soon, then there is absolutely no need for you to invest in an offshore team. However, if growth is an important factor for you (or you can't get the capacity you need at home) then expanding your team in India is a worthwhile and lucrative option.
If you are already thinking about going offshore, one of our employees will be happy to answer any questions you may have. Simply click the button below to make an appointment for a free interview. We are happy to hear from them.
When we speak of developers, programmers, managers, candidates, employees, or other job titles in this article, we mean women and men alike.
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