Employees are the backbone of any company and one of the main driving forces behind its success. As competition increases and reliance on technology deepens, businesses increasingly need talented IT professionals to maintain their digital systems and develop their software innovations. But given the high recruitment costs, having in-house staff is not always viable in certain stages of a business’s journey, particularly during its early days. This is where outsourcing comes in.
Simply put, outsourcing entails relocating a company’s business process to a third party. Organisations usually outsource a part of their operations when they require a specific set of skills they cannot procure in-house to achieve a particular goal. This business model helps to reduce overhead costs and increase profit margins while maintaining a high standard of work. With that said, there are two ways to go about IT outsourcing, and they are offshore and onshore outsourcing.
What is Offshore IT Outsourcing?
Offshore outsourcing is an industry practice of contracting companies located in different geographical locations to handle their projects or maintain a certain business process. The benefits of offshore IT outsourcing are:
- Affordable costs
Outsourcing to an offshore company yields cost-effective results as their services generally retain the same high quality but at an inexpensive price point. Offshore outsourcing helps save on operation costs as there is no need to spend on facilities, administration, and so on for the workforce you get.
- Access to a global talent pool
Offshore outsourcing companies make hiring a team of professionals at a lower cost easier. Moreover, companies can access a greater talent pool since their options are not limited to those residing within the same borders as them.
- Reduced risk from asset lawsuit
Working with an offshore company helps reduce the risk of asset lawsuits or searches since they are separate from the business. This is due to them being under different overseas jurisdictions with their own laws and legal system.
The common disadvantage to look out for when working with offshore IT outsourcing companies include the following:
- Cultural differences and language barrier
Cultural and social norms vary from region to region, which can sometimes cause issues. For instance, people from nations with entrenched spiritual beliefs and celebrations may affect work schedules.
- Offshore fees and regulations
Despite their affordability, offshore outsourcing providers are typically subject to fixed annual fees. Asset distribution is one of the key aspects to watch out for since any income or assets transferred to the offshore country may be taxed.
What is Onshore IT Outsourcing?
Onshore or local outsourcing means hiring a third-party organisation based in the same country as the client company. This closer proximity enables better control between two parties and services that may require the third party to physically carry out their services. The main advantages of onshore IT outsourcing include the following:
- Same time zone
Time differences will not pose an issue since everyone is in the same country. As such, there is no need for either party to make adjustments to accommodate the other, as most catch-ups or meetings will take place during the day. Moreover, there is no need to worry about not being able to reach the outsourcing company in times of emergency.
- No cultural differences
Cultural differences will not pose an issue in the outsourcing relationship, given that the people from both parties share the same culture and customs. Furthermore, there is no language barrier to overcome, which facilitates communication.
Although onshore outsourcing has great benefits, it is not without shortcomings, with the biggest one being:
- Higher cost
Unlike their offshore counterparts, onshore outsourcing providers are based in more developed nations with stricter and well-regulated labour laws. This means higher service costs to compensate their employees well.
Deciding to outsource some of your IT processes is only the first step of many; business owners must also look into numerous factors, such as going offshore or onshore, when choosing the best IT outsourcing provider for their needs. Moreover, be sure to avoid these common outsourcing mistakes.
If your organisation could use the expertise of a reputable IT outsourcing company in Singapore, look no further than TYPENT. Our years of experience in the industry have made us the trusted partner of many renowned companies like VMWare, Lenovo, HP, and more. Whether you need email security solutions, network support, Singapore firewall services, or anything else, we are the one-stop shop for all your business IT support needs.
Contact us today for more information.