Outsourcing is the act of contracting an outside party to undertake a service that had been executed within the company thus far. Outsourcing is an excellent way to reduce costs, maximize efficiency and maintain strictly timed deadlines. Outsourcing is further divided into inshore (where the company outsourced to is within the nation and area of the company that is outsourcing its service) or offshore (when the company where the service is outsourced to is in another nation). But what if a company could understand the factors that made offshore outsourcing so lucrative and preemptively set up its own offshore software services to cater to its own need for such? Would that not cut costs even further while providing a more efficient and integrated business model? Welcome to the world of offshore software services.
Contrary to popular opinion, offshore software services are not a new phenomenon and have been around since the early nineties. The current world leaders in it are India, Russia, China and Ukraine. There are five factors to be considered before a company decides to set up its software wing in another country. They are:
1. Cost / Affordability: This is the primary consideration and it compares the cost of setting up a company from scratch and manning it with competent professionals, versus the affordability such a move can provide.
2. Geography / Strategic placement: This factor is essential to understanding how and where a company might set up its offshore offices. For example, it would be cheapest to set up a company in Papua New Guinea but it would be impossible to fill it with competent individuals and the volatile political climate would also ensure serious breaks in the company’s ability to deliver on its duties.
3. Commercial Considerations: This is a very important factor when considering setting up offshore software services. Without this, there is no point in setting up a company overseas. Under this heading are a host of probabilities to understand before moving forward. Most often, the need for setting up the company, the availability of talented professionals and the amount of time needed to set up the company are to be considered. Another important factor is the actual cost of it all versus the cost pf doing it at home or simply outsourcing the services to a third party vendor. Though very beneficial, the costs must defray themselves before this is economically viable.
4. Practicability: Simply stated, the realities as stated on paper are very different than the realities on ground when it comes to countries. Thus the viability of setting up a company in another nation must be worked on, keeping only the practical aspects of it in mind.
5. Options evaluation: Sometimes, it is not going to be economically viable to set up offshore software services. It will be cheaper and more efficient to either perform the services within the company or to outsource them to a reliable, reputed third party who has expertise in that particular service.
Finally, weigh all pros and cons, figure out which solution benefits you financially and technologically, and then only decide to set up our own offshore software services unit.