All About Offshore Outsourcing, Its Types, and Benefits
- Updated on 4 Apr 2024
- 7 min
Max Babych
CEO
Offshore outsourcing is more than just a business strategy. It’s a way to transform and optimize your business operation without compromising on delivery speed and quality of the final product.
More companies are choosing to outsource their IT activities every year. Researchers expect the global IT outsourcing market to reach $764.63 billion by 2030, and this trend will not slow down.
So, what type of outsourcing is better for you? Offshore, inshore, or nearshore? Are there any differences at all? Let’s find out.
In this article, we’ll guide you through the following topics:
- The essence of offshore outsourcing and why it is better than onshore and nearshore outsourcing.
- Services you can outsource offshore.
- Key points to know about a reliable outsourcing partner.
What Is Offshore Outsourcing?
Offshore IT outsourcing is when a company hires another company located in a different country to handle its IT needs and tasks. This can include software development, website maintenance, mobile app development, quality assurance, and other IT-related services.
For example, a company based in the United States might outsource its software development projects to a company in Ukraine. With its skilled specialists and dedication, the Ukrainian company completes the software development tasks for the US company, often at a lower cost than hiring in-house developers in the US.
This arrangement allows the US company to focus on its core business activities while leveraging the expertise and resources of the offshore IT outsourcing partner.
A great stimulus for the development of offshore IT outsourcing was COVID-19. Companies started looking for ways to reduce spending while keeping their processes going. Employees became more flexible in getting jobs and also moved online.
For now, IT services constitute approximately 75% of the total value of global outsourcing contracts. This number includes offshore, onshore, and nearshore outsourcing services.
Let’s examine the main features of each option.
Offshore vs. Onshore vs. Nearshore – Which One is Better?
We’ve already figured out what offshore outsourcing is. Now, let’s move on to the onshore and nearshore.
Onshore outsourcing means hiring another company in the same country to do certain tasks or services for you. For example, if a company in Texas hires a customer service company located in California, it’s onshore outsourcing because both are in the USA.
This type of outsourcing can be good because it’s easier to communicate and follow the same rules. However, it might cost more than outsourcing to other countries.
Nearshore outsourcing is when a company hires another company in a nearby country to do certain tasks or services for them. For example, if a company in the United States hires a software development company in Mexico, it’s nearshore outsourcing because Mexico is close to the USA.
This kind of outsourcing can be beneficial because it’s simpler to communicate and travel between the two countries involved. It can also help save money compared to hiring companies within the same country.
Types of IT Outsourcing
What IT Activities Can Be Outsourced Offshore?
As a rule, companies use overseas outsourcing for non-core but second-priority processes. Besides, your in-house staff can focus on more important tasks and goals.
Among the most common operations that are outsourced offshore, we can outline:
Web & App Development
If you need web or mobile app development services, consider offshore outsourcing. Along with project flexibility, the benefits you get include:
- access to highly skilled professionals from around the world
- coverage of all web and app development processes
- opportunity to hire specialists from a specific country that your product is targeted at
Outsourcing web development services can quickly scale and boost your business. The key points are finding a reliable outsourcing partner and a smart process organization.
UI/UX Design
Do you need a user-friendly website or app design for your business? Outsourcing UI/UX design projects allows for benefits like:
- finding specialists who already have UI/UX research experience in the field and market you are targeting
- testing different UI/UX design approaches and methods
- no need to have your own in-house design department for short-term projects
Depending on your business goals and budget, dedicating UI/UX services to a third-party provider can be a great solution.
Customer Support
Businesses often establish call centers and customer support departments in countries with lower labor costs, such as the Philippines or Poland. This allows them to be flexible and:
- ensure business process efficiency
- offer 24/7 services
- access employees proficient in many languages
This is a great way to enhance customer service and increase customer satisfaction.
Front Office Services
These refer to business processes that involve interaction with clients. It may include sales, accounting, reception, customer relationship management (CRM), etc.
By outsourcing your front office services, you receive:
- smooth and round-the-clock business operations
- more optimized company structure
- new approaches to customer relationship management
Delegating your overseas front office services can help you organize business processes and improve customer satisfaction.
Outsourcing is an excellent solution for businesses seeking rapid process scaling. Whether you need to make a brand new app, create a marketplace, or develop a comprehensive MVP, we’ve got you covered.
Check out our case studies to learn more about how we can help your business stand out.
6 Benefits of Offshore Outsourcing
Remember, we’ve mentioned that the global trend for IT outsourcing is gaining momentum. Well, some studies reveal that over 50% of organizations worldwide said they want to increase offshore IT outsourcing.
There are some reasons why transferring business processes abroad has become so popular compared to nearshore and onshore outsourcing. Here are a few of them.
Wider Choice of Professionals
According to the ICIMS report, over the last few years, employers in the US have only hired 60% of the needed tech talent. Interestingly, there were twice as many applicants as open positions. This shortage of skilled tech candidates, such as dedicated frontend developers, has led more companies to consider offshore outsourcing for access to global tech expertise.
Offshore outsourcing allows you to access a wider pool of talented and skilled specialists globally. This allows you to hire individuals with expertise that might be scarce locally. As a result, an expanded talent pool helps boost the quality of products and services.
Improved Adaptability and Scalability
Overseas outsourcing offers better business flexibility and scalability.
Companies can adapt to changing demands and market conditions by outsourcing their processes abroad. You are free to decrease or increase the number of projects you outsource. Moreover, this usually can be done without significant investments in infrastructure or staff.
24/7 Operations and Time Zone Benefit
You can operate seamlessly around the clock with an offshore service provider.
With teams strategically distributed across different global regions and time zones, your business can maintain uninterrupted operations 24/7. While your local team rests, your offshore counterparts can continue working, ensuring progress even during your off-hours.
Should any tasks remain unfinished by your local team, they can be seamlessly transitioned to your offshore staff for completion. This seamless handover guarantees a steady workflow across projects in both your home office and offshore locations.
Focus on Key Business Goals
One of the key benefits our clients often mention in their reviews is the ability to focus on their core tasks while we take care of the tech part.
Indeed, when delegating development services to professionals, your in-house team can concentrate on primary goals. During this time, your outsourcing partner will handle routine and second-priority tasks. This helps optimize processes and boost team productivity as well as overall job satisfaction.
Reduces Overhead Costs
When thinking about the benefits of offshore outsourcing, money matters. In fact, cutting costs is one of the main reasons why over 70% of businesses decide to work with IT service providers.
Companies can cut expenses by moving business functions to countries with lower labor rates. These savings allow for investing in essential activities and business development. By doing so, you can enhance your company’s competitiveness in the market.
Reduced Business Risks
Offshore outsourcing minimizes risks by diversifying operations and resources. This can reduce the impact of any unexpected disruptions or market challenges. Businesses prevent relying solely on one market by outsourcing processes to various countries.
As you can see, outsourcing business processes abroad offers many benefits that can help you gain competitive advantages. So, why don’t you collaborate with a reliable outsourcing partner like SpdLoad and level up your company?
Offshore IT Outsourcing in India and Ukraine: A Comparative Analysis
India and Ukraine have emerged as the top IT outsourcing destinations in recent years. Yet the noticeable contrast between them often confuses business owners. Here’s a brief comparison of both countries in terms of IT outsourcing.
| India | Ukraine | |
| Literacy rate | 74% | 99.8% |
| Country’s innovation rate (according to Bloomberg) | 52 scores | 58 scores |
| Education ranking | 59th place | 40th place |
| Global Skills Index (according to Coursera 2023 report) | ranked 60th | ranked 15th |
| Time difference | ~5 hours with Europe ~10 hours with the US | ~1 hour with Europe ~7 hours with the US |
| English proficiency (according to the EF English Proficiency Index 2022) | #60 in English English Proficiency Index rate | #45 in English English Proficiency Index rate |
| Culture and mentality | South Asian | European/American |
You can choose specialists based in India or Ukraine, depending on your goals and budget.
Both India and Ukraine have their unique strengths and challenges. While India remains a giant in the outsourcing arena, Ukraine is an emerging competitive player. Many companies want to work with Ukrainian specialists, highlighting their professionalism, dedication, and quality talent. In fact, the IT sector is booming in Ukraine.
In 2016, Ukraine had 100,000 IT experts. By 2023, this tripled to over 330,000, including non-delivery professionals. Ukraine’s IT community has been key to the success of software projects worldwide, driving this impressive growth.
When choosing an outsourcing partner, make sure you carefully evaluate your specific needs and consider factors such as cost, talent, and geopolitical stability.
How to Find a Reliable Offshore Partner?
Now, you have discovered types of outsourcing, their benefits, and what processes you can delegate. The last question is where to find a trustworthy outsourcing partner.
At SpdLoad, we provide software development services suited to your needs. Be it web and application development, UI/UX design, software testing, or SaaS outsourcing, we have got you covered.
Our specialists have deep expertise in developing various software solutions. You can look over some of their examples on our case studies webpage. Choose the SpdLoad team as your offshore outsourcing partner and get our in-depth expertise. If you have any questions, feel free to contact us, and our team will assist you.
