CEO of Ideamotive, a marketplace matching tech talent with companies worldwide. Co-author of “The State of CEE IT Outsourcing 2021” report.
“Go somewhere cheap.” When asking for an IT offshoring market recommendation 10 or 15 years ago, this would quite likely have been the answer. Fast forward to 2021, and an ideal outsourcing destination needs to offer much more than just labor arbitrage benefits. Indeed, as many as 90% of the respondents surveyed by the GSA UK “strongly believe that both buyers and providers will be signing outsourcing contracts focused on outcomes and value in 2020+.”
Companies are increasingly looking outward to alleviate the tech talent crunch for IT and software development support. But to fulfill their innovation ambitions, they don’t just need any offshoring partner — they need one that strikes the right balance of cost affordability, impeccable work quality and flexibility to accommodate dynamic changes.
Where can you find the right partner? Head toward a market or geographic area that checks all five of these boxes:
1. There’s a vast talent pool available.
The talent pool size is a critical factor when choosing the market for offshoring support. Having access to markets with a robust developer and engineer community means your company can ramp up a team in a snap and progress with the project at full throttle, instead of wasting time and resources on an endless talent hunt.
To fill in critical software-related roles rapidly, focus on geographies with a large and diverse talent pool. You might need Java support now and Kotlin skills tomorrow, so it’s sensible to zoom in on offshoring destinations that can rapidly supply IT and software experts covering a wide range of technologies.
2. It has agile-driven organizations.
The days of decades-long service contracts and notice periods are long gone. Today, companies are taking more dynamic approaches to outsourcing and offshoring that mirror technological change’s rapid pace. They seek partners who demonstrate similar flexibility to cooperate fast and efficiently within short periods.
By designing your IT outsourcing relationship to agile ways of working, you make room for an outcome-driven collaboration. Such an approach puts people and communication first, instead of overconcentrating on admin tasks and procedures. As a result, projects are often delivered quicker and more cost-efficiently, despite engaging smaller teams. To tap these benefits, look for outsourcing markets where the agile methodology is already widespread.
3. It’s a cultural fit.
It’s not only Peter Drucker who believes that “Culture eats strategy for breakfast.” According to the results of research by LSA Global, culture accounts for 40% of the difference between high- and low-performing companies. And just as misaligned workplace culture can shatter any well-functioning business, cultural incompatibility between an outsourcer and supplier leads straight to disaster.
There are many cultural aspects to a well-functioning offshoring engagement. These include speaking the same language, a time zone overlap and similar work ethos and power distance. Some of them, like language skills, are relatively easy to gauge (using tools such as the English Proficiency Index). But other aspects are more subtle and require an in-depth analysis of the offshoring geographies.
Large organizations solve this by working with culture advisors who help them reconcile different — often clashing — values, concepts and work approaches. But smaller companies can also do their bit of research before engaging with an offshoring partner. Resources like the Doing Business project, Euromonitor and Transparency International research are very useful in analyzing the impact of cultural differences in particular countries and identifying the ones that are best aligned with your practices.
4. It’s amid a vibrant tech scene.
Innovative feedback loops, an explorative environment and brainstorming and innovation sessions are an integral part of modern, value-added outsourcing partnerships. Unless your company only needs an extra pair of hands to churn out more lines of code, you will most benefit from an offshoring partner who will foster innovation to build your competitive advantage. Such a company knows the difference between a lasting innovation and a passing fad and is well-equipped to advise you on driving transformation through technology.
But how can you best find it? Check which countries emphasize investments in the tech sector. Verify the size of their startup scene. Which giant tech firms take an interest in their IT workforce? How many of them have opened R&D centers out there? These are some good indicators of well-developed tech markets that thrive on innovation and are a top choice for delivering IT and software development support.
5. It’s in compliance with international standards.
This last point is not to be overlooked, especially if yours is a regulated industry. Before engaging with any external IT provider, ensure that their procedures are aligned with your company’s internal policies and the legislative measures your business is required to follow.
Your offshoring partner should meet the same IT, data and system security standards as your organization. These may vary, depending on the geographical region where a company is based. In Europe, for example, all IT organizations are obliged to comply with the General Data Protection Regulation (for personal data protection), the ePrivacy directive that safeguards the confidentiality of electronic communications and copyright law, which specifies rules to protect software through copyright. Engaging with offshoring providers from countries that follow well-established international compliance regulations reduces your compliance risks and simplifies outsourcing arrangements.
The sum of the parts should be greater than the whole.
The shift from cost-oriented offshoring engagements toward outcome-based collaboration means that business priorities and customer experience are finally coming to the forefront. But to create sustainable value from such partnerships, both sides need to align on many levels.
In a way, choosing an offshoring partner to conduct critical software and IT-related tasks is like deciding on whom to marry. We’re talking about a possible long-term engagement that should be mutually beneficial and founded on trust, respect and support. And like any relationship, offshoring cooperation can be harmonious and fulfilling on both ends or transform into a complete disaster. To avoid a painful breakup and enjoy the profound benefits of a lasting engagement, make sure your selection meets these five criteria.