Which is Better: Traditional IT Outsourcing or Offshore Development Centres?

Collectively over the last two decades, there’s been a massive pivot in the way businesses are run. Far gone are days when companies conducted all their business operations in-house. It was more feasible to have every person on the company payroll. Today, it’s become a norm that corporations are driven by skilled workers in-house, offshore, or outsourced in entirety.

With the prevalence of state-of-the-art IT-based technology, business models have adopted a more flexible format for employing skilled talents across the globe. The advent of this flexible format birthed the two commonly known business models – ‘outsourcing and offshoring.’ These two models have transposed the business world into a completely different landscape. 

Addressing The Big Misconception

People use the two IT business formats – ‘outsourcing and offshoring’ interchangeably; however, they are as different as different can be. By definition and in practice, they are different. 

• Outsourcing: Outsourcing implies delegating specific tasks to a third-party vendor with better talent, skills, and infrastructure to expedite the process and significantly cut costs.
• Offshoring: Offshoring, on the other hand, is to get work done in another country to leverage the significant cost difference and garner further advantages. 

These terms are not to be used interchangeably and instead done so with the right understanding of their functions. 

That brings us to the question we’ve all awaited to answer: Which is better? Outsourcing or Offshoring? The answer to this depends on several variables and the combinations they form to help assign more value to how the business is run. 

Advantages of Opting for Traditional Outsourcing

Makes Room to Focus on Core Areas

When non-tech-based businesses outsource their work, it makes significant room for businesses to focus on core areas of business building. The company will not assign mundane tasks to those without experience or expertise in the subject matter of internal resources.

Provide Access to Skills

Outsourcing makes room to access a bigger pool of skilled talent worldwide and improves your business processes while creating an innovation-forward business environment. Is it not better to find the right talent for the job than talent with less expertise within the area? 

Cost Effective Option

Allows businesses to assign a budget to the outsourced work and pay only for the work provided by the outsourced talents. You must not partake in the overhead costs incurred by the service provider. 

Provides & Upholds Flexibility

The outsourcing work model can scale the project flow up or down based on the business’s exact needs. 

Disadvantages of Opting for Traditional Outsourcing

Face Lack of Control

Most companies tend not to assign dedicated resources or project hours to outsourced projects. This could lead to a discrepancy in terms of workflow and the lack thereof. This also means you face a lack of control over the project. 

Gain a Minimum Level of Commitment

If you are looking for long-term strategic partnerships for your web and mobile-based applications/products, outsourcing is a flawed model for your business. Outsourcing is more so a transactional model without the promise of a long-term alliance. 

Confidentiality is Concern

As mentioned in the earlier point, no team or dedicated talent is assigned to projects when it comes to outsourcing. This entails working with multiple clients at a given time and, thus, a lack of confidentiality. Outsourcing does not involve signing an NDA, which could put your proprietary information at a blatant risk of privacy. 

Barrier in Communication

Linguistic barriers aside, there can be other significant reasons for experiencing a hard time communicating your business needs and requirements for your team. This could crumble the chain of communication and cause a breach that harms more than helps the project flow. 

Quick Plug: The Netsmartz Offshore Development Centres worldwide cater to various technological needs and frameworks. Our dedicated offshore development agency is fully-staffed with teams with the market experience and skills required to uphold your business needs with finesse!

Advantages of Opting for Modern Offshoring

Gain Contractual Commitment

Contractual agreements bind dedicated offshore development centers. They become an extension of your workforce offshore as opposed to in-house. However, this arrangement allows for more control over the direction of the project as opposed to outsourcing. 

Gain Dedicated Workforce

One of the best assets of having an offshore development center is the benefit of a dedicated workforce working solely for your project. This way, it is easier for a long-term alliance, and you can make changes to your projects based on the evolving business market needs and trends. 

Acquire Skilled Talent

On the other hand, you can play a significant role in the talent acquisition procedure for your project if you go with an offshore development company. This makes room enough to hire the best talent for your project instead of being handed the team you can get. 

Companies can have access to highly professional and premium skills. The years of experience and expertise in the field give them an edge over those that in-house teams may not possess. Their talent is backed with the proper training and upgradation of skills, making them best suited to take on the project. 

Decrease in Reliance on Infrastructure

The need to set up office equipment, IT infrastructure, or any other amenities is null; therefore, there’s a decrease in overhead costs. 

On-Time Delivery of Projects

Offshore development centers are a highly efficient way of running business operations related to IT. They are swift and reliable as well. The evaluation and reporting process is streamlined to help deliver the projects timely. Following and sticking with the plan can help deploy tasks diligently and deliver them at a quicker pace. 

Avail Strategic Approach

With offshore agile development centers, you can be part of a strategic approach and set long-term business/product-based goals. It is next to impossible to broach a topic with the same level of strategic importance in an outsourcing project. 

Disadvantages of Opting for Modern Offshoring

An Expensive Agenda

Although maintaining an offshore development center significantly reduces the cost of hiring a team in-house, it is vastly more expensive than simply outsourcing the job without any control over the project. An offshore development center could also pay for resources such as infrastructure and all overhead expenditures related to offshoring your IT wing. 

A Long-Term Alliance

As mentioned as part of the advantages, going with an offshore development center model could mean committing to a long-term contractual relationship, which sounds much like putting all your eggs in a basket and hoping each one of them sprouts well. 

Traditional outsourcing and modern maintenance of offshore development companies both come with their set of advantages and disadvantages. If you as a business is leaning towards any of the two types, ensure that you weigh the pros and cons well before making a clear-cut choice. 

IP Issues

The most common issue that companies face while going with offshore development agencies is the theft of IP. Develop the right plan to secure your IP, including algorithms, data, code, and company value. Limit the access to assets in the company based on the level of clearance each person within the ODC deserves. 

Collaboration-based Concerns

When opting for offshore development centers, there’s the possibility of running into constraints that could thwart the relationship. Some of these differences are cultural differences, language barriers, miscommunications, and time constraints. You can, however, fix these issues by allotting time for discussions. 

Our Expert Take: Offshore development centers offer you the best of both worlds and, therefore, may be a better option than the traditional outsourcing model.

Differences Chart

When to Choose Offshore Development Centre or a Traditional Outsourcing Model? 

A basic review of both the models to help you ascertain which is a better option for you. 

Choosing a Traditional Outsourcing Model

Typically, a traditional outsourcing model is the preferred business model for startups and midsize businesses. They also work like a charm for small to medium-sized project types. In fact, the control and relationship that this model brings about are that which is task-oriented. Moreover, team ramp-up depends directly on the current project requirements alone. The clients exercise no control over the project, and there’s very less transparency throughout the projects. 

Choosing the Offshore Development Centre Model

Generally, bigger companies with a global presence opt for offshore development agencies. They are definitely more suited to taking on long-term projects and relationships. This helps in setting up long-term projects. In fact, the model is strategy based, and sticking to a strategy can help garner the best results for businesses. Companies partnering with offshore agile development boards can easily access full-fledged software, development teams. Customers also exercise the full-control over development rather than not. 

Conclusively, each industry, from healthcare to finance. Every vertical can leverage the advantages of opting for an offshore development center from manufacturing to marketing. With the everchanging demands and requirements of modern businesses, going with the ODC model is being able to meet the diverse needs of the communities. 

Netsmartz is your leading software development company based on the offshore development model for business. We offer mobile app and web development services to eCommerce and other areas of interest. 

If you are looking for the perfect offshore development centers with dedicated software developers, connect with us now!

Book your free consultation today!