Here’s what to consider for choosing what’s best between on-premise, outsourcing, or offshoring as a staffing solution.
Software businesses need to scale, recruit talent, serve clients, expand product lines and so much more to compete. Welcome to the day-to-day world of those organizations managing successful operations in the wake of COVID-19. They face demands to create more solutions in an environment where software talent is probably spread thin near their operations center.
Businesses finding themselves in these circumstances face options that include expanding established developer teams to address emerging project load, adding new permanent talent for those roles and contracting out with for-hire expertise.
Here’s what to consider for choosing what’s best between on-premise, outsourcing, or offshoring as a solution.
Software development is complex. There are many moving parts, and developers–like most professionals–prefer to work co-located with their peers to help drive ingenuity, collaboration and teamwork.
So a fundamental question every organization should ask itself when expanding development teams is: Why complicate doing development through outsourcing or offshoring?
If the company has all the resources necessary to remain in-house and stay on-site, it should hire new and slot talent into those roles. Keep it simple, not complicated.
However, too few organizations have a prospective talent base readily available to staff an expansion. Fewer still have the available budget to afford to pay market rate for that top talent. Enter outsourcing and offshoring as viable solutions.
The challenge for many companies is assembling a talented pool of software professionals to deliver on the organization’s roadmap and its value proposition. The reality for most companies is the number of skilled pros needed does not already exist in-house. Likely, they’re not even in the same metro market. It’s a real constraint.
Entire software teams can be co-located locally, but it’s no longer common. The current norm is distributed teams with tooling and infrastructure support that allows development to progress outside traditional four walls. While development has matured, distributed talent is now mainstream.
For technology companies needing to scale, effectively leveraging the global talent pool can be a secret weapon. Assembling the right team to deliver on your value proposition more quickly or comprehensively than the competitors can set the business apart. It’s why outsourcing or offshoring is worth consideration.
Determining whether–and which option–to choose between outsourcing and offshoring will take looking internally first. This is because not all organizations are right for outsourcing, and some situations are more suitable than others.
Is the expansion within an area of the company’s expertise, goals clearly defined, tools and infrastructure in place to hit the ground running, and communications a strong suit within the organization and among its existing teams?
Critically assessing itself and demonstrating high-performance levels in these areas will be crucial.
Will the project need delivery in a month or so? Offshoring does not suit this circumstance, and even outsourcing can struggle with quick turnaround times. In either instance, throwing bodies at a job when they are unfamiliar with the company is no recipe for success, either.
Projects with deadlines of a couple of months or more are prime for outsourcing. Talent-for-hire partnerships can deliver results in a few weeks when operating in their wheelhouse. For offshoring, projects beyond six months fit better. So too will projects needing dozens of team members.
Depending on the company’s location, it may be possible to add a new five-member team, but probably difficult to bring ten on board in today’s stretched domestic talent market. Offshoring will be distinctly favorable when a dozen or more are deemed necessary, both in recruiting timeframes and remunerations.
Central and South America’s talent market is comparable to the United States. Eastern Europe is favorable too, and, in general, either can supply ten talented developers at a rate up to 20 percent less expensive. When more employees are needed in the long-term, looking to India for offshoring will prove beneficial. And there are ways to overcome time zone challenges.
The 11-hour time difference between the two countries can be overcome with clearly defined goals and an advocate championing success for the new team, preferably with the external-facing U.S. project manager and internally-focused product owner embedded with the scrum team in India. Additionally, it’s imperative this advocate is secure in their position with the company and fully backs the utilization of offshore talent.
As the pandemic allows, be sure to schedule the project manager to regularly visit the team abroad for at least one week. Likewise, the product owner should get to experience periodic two-week- or month-long engagements at the company’s headquarters. The extra time allows them to engage in the workplace culture to enhance its adoption once returning overseas.
Suppose offshoring for a long-term project, rapidly recruiting large numbers of skilled pros is more complicated if the company is not a recognized brand. Importantly, resist over-hiring talent. Align the skill being hired with the role needed to be filled. Salary offers may easily attract vastly experienced senior developers who are over-skilled for the position. Boredom can result if the role does not challenge them. Also, avoid splitting the QA and developer team members between domestic and abroad.
The HR, legal and accounting departments will be involved with an offshore team, so the infrastructure within these areas must also be strong to support overseas operations.
Finally, know whether your existing contracts allow for offshore involvement with their information. There are no HIPAA restrictions on using offshore teams. The same privacy and security obligations placed on a domestic firm must be maintained overseas. However, there may be clients who restrict such operations.
In every instance, if the organization is confident in building and maintaining highly functional collaboration, creating offshore teams or hiring outsourced professionals can successfully achieve company goals and even grow a more diverse and vibrant workplace culture. It’s an enviable trait the company may be trying to achieve but not recognize as a by-product of outsourcing or offshoring.
Mike Watson is senior vice president of Agile product engineering at Excellarate and a veteran developer and software management professional with extensive experience leading both on-premise and remote teams to successful business outcomes that generate millions of dollars in revenue ranging from startups to multinational Fortune 100 companies. On LinkedIn and Twitter.
