Offshore staffing vs Outsourcing Software Development to India | Cost vs Quality

Introduction

The global pandemic has forced businesses to change the way they operate. One of the most significant changes is how companies are now sourcing their employees. In the past, it was common for businesses to outsource their software development needs to countries like India and the Philippines. Businesses now are moving toward offshoring for better quality at better costs.

Based on research by the University of Michigan business school and the University of Pennsylvania's Wharton School, there is a 14% average annual decline in quality-adjusted price for software projects developed offshore. This is quite a significant benefit for most companies with software development requirements in the US.

However, before you decide to offshore staff, you need to weigh the costs and benefits carefully. Make sure you understand all the risks and challenges and a plan to manage them effectively. Here, we will explore some data and the pros and cons of hiring an offshore team in India.

Benefits of Offshoring over Outsourcing

There are many things to consider when optimizing efficiency and cutting costs. In recent years, Offshore staffing has become a more viable option when compared to outsourcing, as it gives better control over the processes, price, and quality.

The cost of hiring from India remains low due to a number of factors, including a large pool of available IT employees, C-level staff, & Project Lead roles, and due to quite a low cost of living. Businesses can expect to save 20-30% on labour costs by offshoring to India:

Here are some of the key benefits of offshore staffing over outsourcing:

1. Cost savings: You are typically charged a premium while outsourcing. With offshore staffing, you get the same quality of work at a fraction of the cost. 

2. Increased flexibility: With offshore staffing, you can scale up or down as needed. It helps when your business goes through a period of growth or downsizing. 

3. Quick turnaround times: When you outsource, there usually is a lot of back-and-forth communication with a higher level of ambiguity, which can slow down projects considerably. Offshore staffing solves this issue quite a bit.

4. Improved quality: The quality of the hired staff is much better, as Offshore staffing companies often have rigorous hiring standards and provide comprehensive training to their employees. It results in a higher quality of work overall. 

5. Access to a global talent pool: One of the best things about offshore staffing is that it gives you access to top talent globally. It allows you to find the perfect fit for your needs, regardless of location.

Cost vs Quality 

So, what is the truth? Is offshore staffing in India cheaper than hiring staff in developed countries? And if so, is the quality of work good enough to justify the savings? 

While outsourcing used to have more issues with quality, companies are moving toward offshore staffing. This has helped companies have better control over quality at very affordable costs.

Researchers from the University of Michigan business school and the University of Pennsylvania's Wharton School also note that the delivery of error-free solutions also depends on investments in software for processes as this helps identify and fix errors early on. The other key finding from the research was that identifying anomalies during the project execution stage helped minimize the likelihood of effort overruns and schedule slippages.

The challenges of offshore staffing

Offshore staffing can be a great way to save costs, but it can also present some challenges. Most notably, it can be difficult to manage staff who are located in another country. There are time zone differences to consider, cultural differences that may impact communication, and different laws and regulations that apply.

To run a successful offshore operation, a clear understanding of the challenges and risks involved and how to mitigate them is essential. With careful planning and execution, offshore staffing companies have found cost-effective ways to get the talent you need while maintaining high-quality standards.

Some of the key pointers that would help overcome these challenges include

1. Hiring the right team
2. Dynamic Communication
3. Dependable Guidelines & Processes
4. Compliance with the Indian law

Conclusion

Offshore staffing can be a great way to get quality work at a lower cost. However, it's important to consider both the cost and the quality of the work when making a decision. In many cases, offshore staffing firms in India can provide high-quality work at a fraction of the cost of hiring domestically. However, due to some of the risks associated, it is important to do the required research and choose a reputable firm accordingly.