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Determine the Pros and Cons of Offshoring for a Logical Approach to Global Competition

Most of the time an organization finds it difficult to manage all aspects of a business process in-house. When some tasks are temporary, an organization doesn’t prefer to hire the internal professionals to perform the task. Additionally, when an organization fails to trace suitable talent in the vicinity on a budget, the Offshore Development Center becomes vital. An offshore development center (ODC), appropriate for mundane tasks or for tasks that are very well defined generally functions to develop, test and deploy software solution and application software.

By investing a consolidated monthly amount on a short term contract, the organizations can step forth to establish a satisfactory rapport with their ODC team. Through a clear set instruction about the work or being diligent in revising the work done, the organizations are able to control their expense and rationalize scaling up or down of their ODC presence. After the task is outsourced, the ODC manager and his team will be responsible for carrying out the task while maintaining the organization’s standard.

Outsourcing

The Offshore development center (ODC) has turned out to be a lucrative business model for small to large scale enterprises to increase their productivity and decrease operative expenses by leveraging offshore talents, located in a low-cost environment, such as India. An India based ODC can be a crucial support of an organization’s global modification strategy. On a deliberate level, India based ODCs are frequently chosen to support organizations worldwide.

The ODC model has confirmed its efficiency by also providing clients with greater perceptibility and liability in the development process. The most common stream of business that needs outsourcing are:

  • IT Outsourcing
  • Content Development
  • Recruitment
  • Web Design and Maintenance
  • Logistics
  • Technical Support

However prior to offshoring any task of your organization to a third party service provider, it is mandatory to procure the in-depth knowledge of the advantages and disadvantages of offshoring. Along with its varieties of benefits, it could also present difficulties if not outsourced to the right team. Most of the time, these advantages of offshoring overshadow its disadvantages:

Advantage

  • Rapidity and Proficiency:
    The tasks get outsourced to vendors who specialize in their field. Well equipped with specific equipment and technical expertise, most of the time it presents better outcome than the ones get perform in-house. Successfully, the tasks can be completed within a short span and the quality of output is better.
  • Better Concentration on Core Process:
    Offshoring the critical aspect of business to the supporting ones gives the organizations sufficient time to concentrate on their core process and strengthening their business.
  • Risk Sharing:
    One of the most crucial factors determining the outcome of a campaign is risk-analysis.
    Offshoring certain element of a business process enables the organizations to handover certain responsibilities to the outsourced vendor. As the outsourced vendor is specialist, they can plan and sort out the risk in a much better way.
  • Reduced Operational and Recruitment Cost:
    One of the prime advantages of offshore outsourcing is its cost effective method. Offshore evades the need to find out the right talent in-house and hence recruitment following the operational costs get extensively low. It enables organizations to achieve the best result with little banking.

These are the disadvantages that make offshoring shortsightedness:

Disdvantage

  • Risk of Divulging Confidential Records:
    When an organization outsources its data, there comes a risk factor too. Offshoring HR, Payroll and recruitment services involves risk in exposing confidential company information to a third party.
  • Synchronizing the Deliverables:
    When the organizations fail to choose the right service provider, some of the common problems they often face include stretched delivery time frames, deficient quality output and inappropriate labeling of responsibilities. At times, regulating these factors in-house rather than through an outsourced team becomes much proper and beneficial.
  • Unseen Costs:
    Although most of the time offshoring is very cost effective but at times some hidden costs hinder the entire business process. The hidden costs that arise while signing a contract across international boundaries can cause a serious threat.
  • Lack of Focus:
    An outsourced vendor, at the same time cater to the numerous expertise needs of multiple organizations and thus it unable to focus and give topmost priority to a particular task of an organization.

(ODC)

With all these pros and cons of outsourcing to be considered before joining hands with a right service provider, it is always vital to precisely define the significance of the task which are to be outsourced. The key facts that are responsible for the growing trend of offshoring are:

  • Lack of expert minds in some part of the business process.
  • Availability of cheaper workforce, whilst without negotiating with the quality of the output.
  • Availability and possibility to concentrate on the other crucial part of business process.

When work is offshored, whether to India or some other nation, one key factor that the organizations need to deal with is how to run the operation. In a nutshell, to maintain and improve the business process, it is important to locate the appropriate quality of the workforce.

Author: Soumya Banerjee

Soumya Banerjee is the General Manager of Sketch Web Solutions, a mobile & web development company based in India. He has been adeptly handling this role for over five years now and has advised his professionals on many advanced and complicated IT projects. You can follow Mr. Banerjee on Facebook or LinkedIn.

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