With improvements in communication and remote collaboration, offshore IT services have made a reputation of a great way to reduce development costs. However, over time this reputation got tainted with claims of subpar quality and miscommunication.

While there is some truth to both of these claims, their net effect is still under scrutiny. This text is a critical look at the main challenges of offshoring along with recommendations on how to avoid them.

Offshore IT Solutions 101

Before we begin, it is worth to cover some essentials and clarify persisting misconceptions about offshore development. Broadly speaking, the term offshoring refers to the practice of relocating some of the company’s operations to another country.

This can happen for a number of reasons, although cost considerations are perhaps the most popular one. The practice is applicable to many different aspects of business, from manufacturing to accounting. However, with the advent of digital services, the term came to be closely associated with offshore IT outsourcing.

Offshoring VS Outsourcing

Offshoring is closely associated with outsourcing – mostly because these approaches are often combined. The link is so strong that these terms are often used interchangeably, leading to confusion. Here is an easy way to remember the difference: offshoring is relocating the work to another place, outsourcing is delegating the task to another company.

So, for instance, if you decide to create a branch or a subsidiary in another country dedicated to software design and development – you’ve got yourself an offshore development center but you’re not outsourcing. If, on the other hand, if you are located in the United States and find another US company to do the work for you – you are outsourcing the task without going offshore.

As the market of remote work diversified, so did the outsourcing options. Several terms have been introduced to specify the type of practice in question:

Onshoring: You and the other team reside in the same country or in close proximity.
Nearshoring: You and the other team are both in Europe but still a long way from each other.
Offshoring: You are a US-based business and set up your offshore software development in Vietnam.

To sum up, offshoring is about location, not task delegation, and may or may not involve outsourcing (although it often does).

Can You Trust Offshore IT Services?

As was mentioned above, the main advantage of having an offshore development team is cost reduction. Employment conditions differ massively across the world so, as means of communication improve, it becomes possible to find an offshore IT company at a fraction of the price in the local market.

However, weird as it may sound, savings also come at a price. In fact, nowadays there’s considerable pushback against the practice, with concerns raised about the quality it offers. Some of these are valid whereas others stem from unreasonable expectations and poor understanding of the market. Below are some of the main challenges of offshoring:

Turnover Rate

An offshore IT company is expected to have experience in onboarding to join the workflow and deliver on the expectations. Unfortunately, this leads to a side effect of managers treating such companies as a convenient disposable asset.

As a result, teams come and go, often with no realistic chance of familiarizing with the project. In the long term, this creates a situation where IT expertise is essentially reset with every new partnership. This might not be an issue for simpler projects but may well ruin more ambitious ones.

Level of Control

The most obvious aspect of offshore IT outsourcing, control, is still somehow overlooked more often than not. Having a team on the other side of the world implies that the management can only do so much to keep their progress in check. The field of software development is probably the least susceptible to this issue thanks to the abundance of project management tools that can handle collaboration at any scale.

Still, some aspects of offshoring are difficult to deal with even with the best technology. For instance, offshore software development in Vietnam will still conform to Vietnam’s time zones, which puts certain restrictions on real-time communication with US-based partners. Again, not necessarily a huge deal-breaker in every case but still something to be mindful about.

Cultural Differences

With globalization on the rise and loads of works written on cultural differences in business environment, it is tempting to think we have figured everything out. Unfortunately, this is still far from true. The good news is the impact of a culturally diverse workforce is not necessarily negative – in fact, it offers numerous advantages when approached with understanding.

In other words, this is not so much a barrier but rather a source of untapped potential that can backfire when treated with negligence.

Misguided Expectations

Finally, poor results of working with offshore IT services can be due to the management not understanding the implications of such an approach. The simplest example is cost: while offshore teams do lower the expenses on development, they have little effect on the cost of everything in-between (e.g. management) and can in fact introduce additional expenses (e.g. having to deal with different time zones).

Again, this is something that is difficult to hold against offshore IT solutions themselves – this is just one of their properties that gets overlooked.

How to Make the Most of Offshore IT Outsourcing

As can be seen, none of the challenges above are insurmountable. In fact, most of them can be resolved in ways that should be familiar to any manager.

Understand Your Requirements: Offshoring comes with many advantages, yet it does have its limitations. If you have to have tight control over the entire workflow, you should probably look elsewhere.
Check Your Offshoring Capacity: An experienced offshore development team will have both the expertise and the infrastructure for remote collaboration. Still, the same is expected on your side as well.
Plan Accordingly: When estimating the benefits of offshoring, factor in all of its aspects, not just the ones that appeal to you the most.
Set Specific Goals: Just like with an in-house team, do not expect good results with waterfall requirements – be specific about what the team should achieve

Conclusion: Still Worth a Shot?

As can be seen, offshoring is not a one-fits-all solution. It certainly has its advantages, both in terms of savings and talent diversification. However, as with any business practice, it works best when its strengths and downsides are understood and taken into account throughout the process. So don’t be discouraged by stories of less-than-stellar results and take them for what they are – cautionary tales of misaligned expectations that exist in any business.