Offshoring refers to when operations of a business are shifted away from its primary area of operations.
It’s usually carried out to tap into labor force cost savings or strategic advantages in a company’s supply chains that can bring about more profitability.
For example, a startup based in the U.S may move its development or engineering team to India, where the labor costs are cheaper while keeping its research and design knowledge stateside.
Offshoring development can be advantageous to a business to help minimize cost and move faster, but there are drawbacks to this. Let’s explore them below:
Advantages of Offshoring
Offshoring comes with some natural advantages to businesses:
1. Cost savings
Cost savings is the main benefit as offshoring ensures a company’s development tasks are moved to markets with lower wages but equally technically skilled employees, this results in better profits.
2. Access to better-skilled markets
MarketsOffshoring can also be used to access better talent. For example, many businesses may offshore their development teams to Eastern Europe, where there’s a strong pool of highly skilled developers.
3. 24/7 Operations
A global workforce can also mean operations can run 24/7 without the need for shift work in one singular market. This can enable businesses to move faster where an offshore development team can ship features overnight, ready for testing by an on-site team in the AM.
Disadvantages of Offshoring
Offshoring also comes with some disadvantages:
1. Quality issues
One of the most common issues with offshoring development is a drop in quality. Offshore teams are generally only high-performing if provided with tight specifications and briefs, and many times do not think strategically in solving their engineering issues. Because of this, quality issues occur.
2. Language or communication issues
Language issues can mean communication with an offshore team can be challenging and result in ‘lost in translation’ moments where the wrong features are engineered, and time is wasted.
3. Cultural issues
Cultural issues may occur when it comes to work styles between an on-shore and offshore team. These can result in effort being wasted in managing the non-work related problems that creep up and delay development timelines.
