Why offshoring your software development makes sense

The shift to work from home in recent years has driven a move offshore

The pandemic has catalysed a change in work culture, with remote work becoming an expectation.

This shift has coincided with businesses grappling with increased cost of living pressures, leading to growing salary expectations that strain budgets. Making matters worse is that this is happening while talent acquisition and retention is already challenging due to record low unemployment rates.

Australian companies have already started shifting their focus on establishing distributed teams. This has been accelerated since the pandemic, but other factors such as those mentioned are contributing.

For example, when tech giant Dell offered its 120,000 employees a choice between working from home or receiving a salary increase, over 50% selected remote work.

There is a significant cultural change occurring in the workplace, and companies are starting to react.

The offshore advantage: cost and quality

A strong misconception when offshoring is that any potential cost savings are negligible due to increased risks and higher management overhead.

While the Australian Bureau of Statistics (ABS) reports a cost saving of 30%, the reality is much more promising, because factored into the ABS statistic is the failure rate of 40%. This means that even with high historical failure, the cost saving is still quite high. With sophisticated support and management processes that support remote workers, companies can expect to reduce costs by as much as 70%.

The quality of staff in countries like the Philippines and Vietnam is hard to look past. With a population of approximately 120 million and robust English driven tertiary education, the Philippines offers a deep talent pool. Similarly, Vietnam has a population of approximately 100 million people and a growing infrastructure base.

A number of countries in South East Asia are eager to work with Australian companies due to our time zone similarity and cultural alignment.

Benefits beyond the bottom line

While cost savings are undoubtedly attractive, the benefits of offshoring extend far beyond financial considerations:

• Talent Acquisition: In a competitive local market, offshoring opens access to a broader talent pool, allowing companies to find specialised skills that might be scarce or too expensive domestically.
• Scalability: Offshore teams can be scaled up or down more easily, with specialised providers providing flexibility to adapt to changing market conditions or project requirements.
• 24/7 Operations: With teams in different time zones, companies can offer round-the-clock service or extend their productive hours.
• Innovation Boost: Diverse teams bring diverse perspectives, often leading to increased innovation and problem-solving capabilities.

Making offshore work

Successfully implementing an offshore strategy requires strategic planning and execution. While the remote work movement prepared businesses for this shift, it’s critical that you still consider the business processes required to support an offshore team.

At its barebones, this includes a combination of communication channels and protocols, cultural training and team-building activities, and technology tools to maintain productivity. By managing these processes upfront, you are establishing a much stronger foundation for your offshore team.

Why the future is distributed

As we move deeper into the digital age, the concept of a centralised workforce is becoming increasingly redundant. Businesses are embracing distributed teams to minimise costs, access high quality talent, and leverage greater flexibility.

By carefully considering your needs, choosing the right partners, and strategically determining which roles to offshore, you can turn the challenges of offshoring into a huge strategic advantage through this otherwise tumultuous period.

• Lambros Photios is CEO of Adaca