Top IT offshoring trends for 2021 and beyond

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Top IT offshoring trends for 2021 and beyond

Since gaining popularity in the early 2000s, the offshore model has reshaped many global industries. Where once it was seen as a purely cost-driven move, today, it is an opportunity for businesses to access niche skills and scale at speed. As the number of organisations that work will offshore teams continue to grow at an exponential rate, here are some IT offshoring trends to watch out for in the coming years.

1. Increase in demand for cutting-edge skills 

The acute global tech talent shortage led to over 40 million unfilled jobs in 2020. And according to experts, this number will reach 85.2 million within the next decade. Left unchecked, this will lead to roughly €7.1 trillion in unrealised annual revenues. 

The reality is that businesses in the West are simply unable to find engineers proficient in cutting-edge technologies such as Machine Learning, Artificial Intelligence, and automation. In fact, the USA, despite being the undisputed tech leader, could lose out on over €136 million in revenue unless it finds more skilled tech workers.

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Offshore development: A solution in sight? 

One of the primary benefits of building an offshore development team is the opportunity to access massive talent pools in emerging tech nations. For instance, according to a recent market study, India will have a surplus of over 1 million skilled tech workers by 2030, potentially making it the next tech leader. 

And so, one of the top IT offshoring trends in the coming years will be the establishment of dedicated teams in countries like India to overcome the increasing requirement for individuals with cutting-edge skills. While the primary focus will continue to be on technical skills, soft skills such as teamwork, communication, and leadership will also be in great demand.

2. New offshore locations 

Currently, India is the world’s number one offshoring destination. In fact, 80% of the world’s 500 largest companies have established their dedicated teams in the country, thanks to many benefits such as low operational costs, flexibility, an attractive array of IT policies, exceptional quality of services, and technological availability.

However, as demand for skilled tech workers continues to grow, more businesses are moving to new offshore locations in Eastern Europe, America, and Asia. For instance, the Philippines, famously known for its BPO services, is expected to become a popular choice for offshoring. So if you’re a small-scale organisation looking to jump-start your business, hiring developers from the Philippines can be a great option. 

Despite the pandemic, 2020 saw huge investments in the tech space, specifically in Europe. Today, Eastern European countries like Ukraine, Poland, Belarus, and Romania are also emerging as preferred nearshoring destinations for businesses in Western Europe. With a negligible time difference and cultural compatibility, organisations are leveraging the nearshoring model to save money and access talent that they can’t find locally. 

3. Enhanced data security

Despite more and more businesses building globally distributed teams, one major concern regarding offshoring that still prevails is data security. 

Years of low-quality outsourcing and exaggerated horror stories about offshore security breaches have led to organisations questioning the safety of their intellectual property and confidential data with their distributed team. Some businesses still see offshoring as opening themselves up to the risk of data theft and compromising their trade secrets.  

And therefore, one of the most important IT offshoring trends in 2021 is cybersecurity for distributed teams. For example, the DSCI (Data Security Council India) Annual Information Security Summit held in 2020 discussed some critical themes such as the national cybersecurity strategy, end-to-end encryption, data-driven organisations, protection of critical infrastructure, cyber insurance, and more. 

On the other hand, businesses are also educating themselves on the fundamental cybersecurity frameworks they must implement to mitigate security risks and protect sensitive data, irrespective of where their team is located. 

If you’d like to know more about how you can implement security measures when working with offshore teams, you can check out our in-depth blog post, ‘A Guide to Cybersecurity for Globally Distributed Teams’. 

Worldwide information security

4. Increase in the use of collaboration tools

Over the last few years, collaboration tools have helped many teams support each other in accomplishing common objectives. And with the rise in globally distributed teams, one growing IT offshoring trend is the use of digital tools as a bridge between local and offshore teams

Implementing modern-day collaboration tools means that businesses that work with an offshore team do not have to worry about miscommunication, time management, and costs. 

Some of the best collaboration tools that you can use when working with offshore teams include: 

1. Podio

Podio is an application that helps teams organise tasks and projects by using a system that adds content, context, and conversations all in one place. The software also has features such as automated workflows, connected CRMs, integrated chat rooms, data visualisation, and task management boards. 

2. Trello 

Trello, known as one of the best project management tools for distributed teams, uses a simplified kanban card-based system to build a ground-level project management framework. Individuals and teams can set up task boards, track progress, attach files and images to the board, create custom dropdowns, and more. 

3. Asana 

Asana is a project management tool that helps you organise your work into shared projects or kanban boards. Every team member, local or offshore, has access to the different tasks and can visualise checkpoints in a particular project, share progress, design workflows, attach files, and streamline approval processes. 

To know about more tools you can use to stay connected with your offshore team, check out our blog post, ‘17 Online Tools for Remote Teams to Stay Connected‘.  

5. Value over price

Outsourcing has been a growing trend since the early 1980s. However, today’s offshore development model is significantly different from the outsourcing model established decades ago.

For starters, the outsourcing model focused heavily on costs and hiring ‘cheap’ labour. Working with third-party contractors in countries like China, India, or the Philippines meant reducing operational costs by roughly 70-80%. While this allowed businesses to scale and make profits, it just wasn’t sustainable in the long term. Lack of customer focus, substandard code, and mediocre products meant that businesses had to look elsewhere. That’s when the concept of offshoring was introduced.

Offshoring development trends

Offshoring isn’t about hiring employees at the lowest price possible. It’s about gaining access to talented individuals who are experts in their industry. While lower operational costs is still one of the drivers of offshoring, businesses are paying more attention to the value that an offshore development team brings to the table. 

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And that’s why, one IT offshoring trend that is becoming increasingly popular is the concept of building dedicated global development teams. By partnering with the right offshore company and building a dedicated team in emerging tech hubs like India, businesses can access the skills they can’t find locally. And because the team is 100% theirs and not outsourced help, they can also monitor the quality of the products and services that the team builds. 

By keeping abreast of evolving IT offshoring trends and following well thought-out strategies, businesses can ensure they have the right ingredients for success irrespective of any challenges which may arise.

If you’re interested in exploring the possibility of building an offshore tech team in Bangalore, the Silicon Valley of Asia, feel free to reach out to us by filling out the contact form. One of our senior executives will get back to you within 24 hours.

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