Offshoring lets a business delegate its processes or tasks to a third-party company abroad. If needed, companies can also transfer the tasks of an entire team, such as a software development team, to the offshoring service provider. So why do companies choose to offshore? What are the reasons IT consulting firms offshore talent?
Companies may offshore talent to cut costs, leverage talent across the world, or save time to achieve uninterrupted workflow while scaling. Businesses use offshoring as a strategic business model. Even the biggest IT companies offshore their services to external providers to maintain top-quality performance in the highly competitive marketplace. If you’re new to offshoring talent, here are three good reasons to consider it:
Many IT firms offshore talent because they don’t have enough manpower and other resources to manage projects themselves. The offshore service provider is in charge of recruiting and onboarding experts for the job. With an offshoring company, an IT firm can rest assured they acquire staff teams with the right set of skills to complete their tasks. As a result, capacity issues can be resolved.
The most successful IT companies in the world have long embraced offshoring. Google, for example, started offshoring back in 2011.
Google was formed back in 1998 and began operating as a simple search engine. Today, Google has grown to specialize in online advertising, cloud computing, software, and hardware as well. Despite being a tech giant, they recognized the greater value of offshoring. Even with the company’s big in-house team, it cannot do all the functions needed to be achieved while maintaining competency.
For this reason, Google announced it was offshoring a department responsible for AdWords, one of the company’s top-grossing pay-per-click online advertising products. And in 2016, Google moved to offshore more IT talent for software development, maintenance for IT service firms, and IT infrastructure management.
Google has since become one of the top IT organizations that have since offshored talent and benefited from increased service capacity and access to global expertise in a cost-effective manner.
The accelerated growth in the tech industry, including artificial intelligence (AI) and the Internet of Things (IoT), makes it necessary to hire highly-skilled IT staff. Unfortunately, recruiting the most qualified IT talent has become increasingly challenging for companies.
There is a shortage of skilled IT staff because it takes extensive knowledge and training to fulfill the role. While numerous IT students are applying to universities, there is an inevitable delay before they graduate and enter the industry.
To make it more difficult, the number of tech companies that need to meet their IT needs is also increasing. This means you will have to compete with other companies to attract competent candidates with the best salary offerings and incentives.
Many IT firms offshore talent because this empowers them to tap into the world’s best experts. With offshoring, your business would not be geographically limited when delegating tasks. Why do all the work of recruitment while incurring huge costs when you can find high-skilled IT staff from an offshoring company more affordably?
Offshoring is an integral part of the IT industry. Many leading multinational companies flourish when partnering with a third-party firm abroad.
This has been the case for Chinese e-commerce company Alibaba. Alibaba’s founder Jack Ma decided to offshore website design and web development tasks because of the scarcity of Chinese website developers. Through offshoring, Alibaba was able to appeal to targeted global markets, which would be otherwise impossible with their lacking in-house talent.
Cost reduction is the biggest reason why IT companies offshore talent. In a 2020 global survey by Deloitte, 70% of organizations choose to outsource specifically to reduce their costs.
Every IT firm benefits from reduced costs. This frees up money to be used in other business areas such as hardware or software upgrades, office expansions, and wages. When hiring in-house IT talent, an employer is required to provide salaries, benefits, office space, and office equipment. Whether you own a big company or a humble startup, all these can cut a chunk of your operational budget.
Offshoring helps IT companies hire staff for a lower cost. This is because major offshoring countries, such as the Philippines and India, have lower wage rates. Your company can recruit IT global experts with only a fraction of the cost you pay for hiring local, in-house IT staff.
When an IT firm lacks the budget to operate, offshoring becomes a valuable business strategy. Take a look at WhatsApp, for example. Its founders chose to offshore because the app’s beta version was experiencing several technical issues in its early stages. The company needed to find the right talent at a lower cost point.
By offshoring their product development, they paid only a fraction of the costs when hiring locally. WhatsApp has since become one of the most internationally-recognized free messaging apps, available on multiple platforms.
There are plenty of reasons why IT consulting firms offshore talent and we’ve just stated three of them above. Some of the other benefits of offshoring include freed up time for core business functions, increased service quality, increased flexibility for scaling up, and increased market competitiveness. Depending on your goals, offshoring could be a valuable strategy to help maximize your company’s potential.
At Atticus, we offer offshoring services in the Philippines. For more inquiries about our service, contact our team here.
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