According to Statista, the global market size of outsourcing services reached 92.5 billion US dollars in 2019 and forecasts for further development and growth of outsourcing and offshoring are only favourable. For a variety of reasons, an increasing number of project managers are opting for this work format. Some companies aim to save costs, while others are looking for well-coordinated teams of professionals. Some want to accelerate the software development process when others need to move their business online without hiring local staff. Task delegation to third-party teams is already becoming the new norm today.
Both global technological giants and small companies use this cooperation format. Large companies outsource to scale quickly, whereas small businesses delegate their tasks to reduce expenses. And the savings here are significant compared to the related nearshoring europe. In this article, we’ll explain why project managers employ outsourcing and offshoring teams, as well as provide some fascinating outsourcing examples.
Advantages of Outsourcing and Offshoring for Online Business
Outsourcing and offshoring are terms that are frequently used interchangeably. However, there is a distinction between these two ways of organizing business processes, although they have much in common. So, before talking about the benefits of these approaches, we suggest you familiarize yourself with these terms in the comparison table:
| Outsourcing | Offshoring | |
|---|---|---|
| 1. Outsourcing is the transfer of business processes to an external organization. | 1. Offshoring is the transfer of business processes to an external organization located in another country. | |
| 2. Outside-the-company access to specialized expertise, cost-efficiency | 2. Outside-the-country access to a global talent pool, lower wages, and expenses | |
| 3. Within one country or abroad | 3. Abroad, distant countries usually | |
| 4. Transfer of secondary tasks to the contractor | 4. Transfer of entire business processes to the contractor |
Let’s see what the pros and cons of outsourcing and offshoring are in general.
To be more precise, their advantages may be as follows:
- Time-saving opportunity.
Selecting an experienced and competent team can take a long time. By using outsourcing services, you can quickly find employees. In addition, excellent professionals perform their duties better and faster, To save more time, you should also consider additional tools such as a logo maker, slogan generator, etc
- Money-saving opportunity.
Typically, companies look for offshoring specialists to save money on hiring local staff. It is more profitable for companies to pay foreign workers with lower wages than in-house ones.
- Access to an extensive pool of talents.
Choosing professionals becomes much easier when you look for them around the world. Sometimes it might be hard to discover decent personnel within one country. For example, you can even manage outsourcing seniors.
- Risk minimization.
When outsourcing, the risks of unforeseen circumstances are much lower because you hire a team that focuses precisely on your niche. It could be, for example, a team of IT developers who specialize in a particular programming language.
- Cooperation based on a contract.
The two cooperating companies enter into an agreement that clearly states all the requirements and duties of the parties. As a result, you can be sure that the contractor meets all standards.
There are some popular projects and outsourcing behind them:
Slack
It is a leading corporate messenger that debuted in 2013. It was a promising startup at the time, and it became a shining example of how outsourcing can help you flourish.
In the initial stages of project creation, the company outsourced the design and development of the application. As a result, outsourcers built a final product from the application prototype, design a logo, web and mobile version of Slack. And that was all done in only six weeks. The company is currently worth $3 billion, and over a million people use the Slack app daily.
Skype
It is a web and mobile application that lets users use video chat and audio calls over the internet. This project started in 2003, and outsourced developers from Estonia helped to develop it. Skype was so successful that Microsoft purchased it for $8.5 billion in 2011.
Google is also known for its commitment to outsourcing. At the launch stage, its staff numbered 60 people. As a fast-growing startup, the need for scaling the business rapidly grew. The company now has almost 90,000 full-time employees, and even they are not enough to support all Google services. That is why the technology giant is often looking for talents around the globe. In addition, Google reduces staff costs by outsourcing.
Top Project Managers Who Use Outsourcing and Offshoring in Their Startups
Let us provide you with information on the people who are masters in project management.
Jeff Sutherland
He is a co-founder and investor in Scrum. Jeff Sutherland developed the Scrum prototype and brought it to the ideal that IT companies now use as a fundamental methodology in software development.
James A. Highsmith
Jim Highsmith is a prominent American developer, author of many books on software development with more than 25 years of experience in IT. He currently works at ThoughtWorks as an Executive Consultant. Highsmith is a professional in the agile approach, and his books focus on agile project management.
Conclusion
Outsourcing and offshoring are great tools for setting up a company’s business processes. By choosing such approaches to work, project managers can help to achieve the businesses’ goals. Such aims may be saving resources and time to develop the final product, the desire to find qualified professionals outside the company, or the need to delegate non-core tasks to third parties. We can learn from the experience of well-known startups that outsourcing and offshoring may enable the company to scale and develop, resulting in increased revenues and recognition.
Author Bio – Anastasia is a passionate writer and Information Technology enthusiast. She works as a Content Manager at Mobilunity, a provider of dedicated development teams around the globe. She is fond of keeping abreast of the latest news in all areas of technology, Agile project management, and software product growth hacking, at the same time sharing her experience online to help tech startups and companies be up-to-date.