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Offshore vs Outsourcing Pros and Cons

ByDave Stopher

Jun 5, 2020

Lately, organizations have actualized re-appropriating strategies to accomplish a favorable situation in an undeniably globalized world. Re-appropriating to outcasts offers various inclinations for the association, for instance, diminishing fixed costs or having the choice to focus on its major development, by re-appropriating assistant activities.

Different Models of Outsourcing

Technological advances in the last decade have allowed companies to outsource their services to providers located outside their borders: this is what is known as offshoring. This technique consists of relocating part of the services or production in other countries to obtain, mainly, cost advantages. The most common destinations are China, Malaysia or India, countries where wages are lower and that offer us a lower cost of production, thus being able to offer much more competitive prices.

However, offshoring is not without problems. Developing business processes thousands of kilometers away brings with it a risk of loss of control of the company, which translates into a loss of quality in production.

Huge legitimate, time, social and even geo-political contrasts imply that much of the time, we have to put assets in crossing over these distinctions. The outcome of this is the advantages that re-appropriating brings us are practically vague. So as to keep away from these disadvantages, another system called Offshore has developed as of late.

At Saigon Technology, we have ideal conditions and unique advantages for outsourcing IT offshore programming services and processes. We apply a service model without competition in the market, based on differential management, thanks to our communication infrastructure, dedicated profiles and optimal time management. In the event that you are searching for an Offshore model that suits your affiliation, interface with us.

What Advantages does Offshore offer us?

Offshore is a model for outsourcing services similar to outsourcing, but in contrast, business process outsourcing is conducted with companies from a neighboring country (located as a four-hour flight). Thus, by being in a closer space, the gain of both parties.

Offshoring implies collaborating with an organization located in a country far enough away that they will work in a financially and at an extremely exceptional time. Apparently, the deported organization will face many language and social contradictions.

On the other hand, offshoring is the relocation of an organization from a company to a remote location who offers offshore development services. For example, a UK organization would choose a software house from a completely different geographic location like India or China.

Currently, there are many companies that follow an Offshore strategy when it comes to outsourcing some of their business processes in border countries. Some of its main advantages are:

  • Greater contact with outsourcers: Offshore entails greater control of production and less time in the decision-making process, as communication is much faster.
  • Transport time reduction: deliveries are made in a much shorter period of time.
  • Similar cultural factors, which produces a better understanding of demand and the market.
  • Same time zone: it facilitates communication and time control.
  • Same labor or commercial regulations: If we know the regulations because they are similar to those of our country, it will be easier not to be penalized.
  • Offshoring is less expensive than offshoring, since it manages your business at a lower cost.
  • Offshoring offers you a variety of options. You can select the best talent from them.
  • Challenge: time difference and communication challenge.

Choose a Suitable Partner

Having made the decision to outsource services thanks to the advantages offered by outsourcing, we must ask ourselves what type of outsourcing is the most convenient for our company. To select the most suitable alternative, we must take into account all the advantages and disadvantages of each model, as well as the type of process that will be outsourced.

When it comes to outsourcing, we must contract with a company that guarantees a quality service and that allows the risks that outsourcing produces to be practically non-existent, while meeting the objectives set.

4 Types of Outsourcing

Outsourcing is a widely used term today, especially in companies that own the service and are aware that, rather than being an option, it becomes a necessity and a business strategy.

Outsourcing is a concept that has several definitions, such as outsourcing, outsourcing, outsourcing. We will say that outsourcing is an economic process in which a company, business or institution transfers resources and responsibilities to an external company, management company or subcontractor to carry out or execute specific tasks.

What can be Outsourcing?

Outsourcing in broad strokes is to outsource, but to outsource what? To clarify this question, we will define certain concepts related to outsourcing. This time we will define 4 types of outsourcing

1 Process

This type of outsourcing or outsourcing is known as BPO (Business Process outsourcing). What it does is to delegate internal company processes to an external outsourcing team, that is, it entrusts a task that directly influences an outsourcing service with the company.

Internal processes such as accounting and maintenance services are commonly outsourced in this area. Through external processes such as human resources, marketing department and commercial monitoring.

2 Activity

Here what is externalized is the activity itself that is part of a complex process. The profiles are of medium complexity where activities such as administrative, production or commercial are generally subcontracted.

Subcontracting an activity generates significant economic savings for the company compared to traditional contracting.

3 Offshoring

This type of outsourcing refers to obtaining services from a specialist who is not physically close to the company, so much so that it may be outside the country. This leads to great cost savings, specifically in manufacturing, production, and transportation.

There is also outsourcing in house, which means that the external team works in the company’s facilities, which is the most common way at the national level.

4 Strategic

This form of outsourcing is known as BPM (Business Process Management), which allows the company to delegate to a specialized external team to carry out global business strategy projects. This generates great benefits for companies that do not have much experience in the commercial sector.

We are Saigon Technology offshore development services provider and transitory services. We specialize in recruiting, selecting and managing the personnel that your company needs.