Offshoring refers to getting services or products from another country or relocating production to another country. In software work, India has emerged as the dominant player in offshoring.
Today 63% of the outsourcing consultants expect their client’s marketing to increase in 2019. The new technologies and IoT such as AI and automated chatbots are likely to introduce in more outsourcing business.
Data revolution, Digital transformation, and automation are not just shaking up how IT operates but also impacts the quality of services under contract with IT outsourcing firms.
Why Offshoring is attractive to businesses:
- Lowers cost of business:
The top reason to outsource overseas is to benefit from lower operational and labor costs are among the primary reasons why companies choose to outsource. Also, companies need to focus on their core business processes while delegating tedious time-consuming processes to external agencies.
- Focus on more essential business needs:
Business planning and development needs analysis and you will be able to spend more time and resources to core functions if the non-core ones are being dealt with by another company.
- Improves Productivity:
The select business processes can improve productivity to focus on its resources and core functions.
- Minimize Risks:
The right offshore outsourcing partner supplements your operations with disaster recovery mechanisms and detailed backup plans, so you can rapidly respond to situations.
- Create new market opportunities
This enables your company to expand your business reach, access new target markets and be close to your end-users.
Issues with offshoring:
- Cost reduction expectations:
The biggest risk with offshore outsourcing is it involves the expectations the internal organization has about how much the savings from offshore will be. Companies may find that services from an outsource provider cost more than expected due to hidden cost
- Data Security:
The offshore vendor security practices very spectacular, however the risk of security breaks is inherently raised when working in international business.
- Loss of business knowledge:
Most IT organizations have business information that resides within the developers of applications. Companies must analyze their business knowledge and determine whether they should move to outside the company or an offshore location will compromise company practices.
- Vendor failure to deliver:
Before considering outsourcing, IT organizations should evaluate the implications of vendor failure. High risk or exposure might deter the organization from outsourcing.
In general, you will benefit in terms of cost and depending on how operations are managed. Offshore outsourcing can cut back IT expenditures by 15-20%. Longer-term, process improvements often make great impacts on both cost savings and the quality of IT services delivered.