Lee Kuan Yew, the first Prime Minister of Singapore once said, “If you deprive yourself of offshore development and your competitors do not, you’re putting yourself out of business.”
When offshore development services first began, in the late 90’s, the concept seemed to be almost absurd to businessmen across the globe. Some even thought of it as an act of “treating people like things.” However, in today’s global scenario, offshore development is no longer the bogeyman it once used to be and is now considered as the unspoken international rule of business. Where once offshore development was seen only as a move by organizations to drive down operating costs, it is now seen as an investment to improve the quality of operations and accelerate speed to the market with scalable and flexible services.
There are umpteen reasons for this radical shift. Lower operational and labour costs, which, in turn, significantly impact an organization’s revenue continue to remain the primary reasons for offshoring. A well-executed offshore development project delivers definite savings to the business. Apart from this, offshoring allows the organization to focus on its core competency. The offshoring industry now stands as the epitome of innovation, an industry that focuses on delivering solutions that offer returns on investment rather than the pure cost reduction. Other reasons for offshoring include space management, scalability, and effective risk management.
In such a global scenario, organizations are looking at offshoring talent, especially in the field of IT. According to Statista, an online statistics portal, the global offshoring and outsourcing market in 2017 amounted to a whopping USD 88.9 billion. Given how dynamic the industry, the market size is poised to grow over the next few years. As the number of organizations outsourcing work to offshore teams continues to grow at an exponential rate, here are some offshoring trends to watch out for in the coming years:
Offshore Development Trend #1: New Offshore Locations
India enjoys the position of being one of the world’s top offshoring destinations. According to market studies, roughly 80% of the world’s 500 largest companies depend on offshore teams for their operations. As demand for outsourcing continues to grow, more and more tasks are moving to new offshore locations in Latin America and Asia. For example, the Philippines is expected to turn into a popular choice for offshoring. It is already famous for its BPO services, thus recruiting offshore development teams from the country would help foreign organizations jump-start their business. However, India continues to remain a premier destination for recruiting offshore software development teams due to significant advantages such as price flexibility, an attractive array of IT policies, exceptional quality of services, and technological availability.
Offshore Development Trend #2: Enhanced Data Security
A longtime concern for businesses that recruit offshore development teams is data security. A lot of organizations see outsourcing as opening itself up to the risk of data theft as protection of intellectual property is not guaranteed which, in turn, could lead to the compromise of their trade secrets. The evolution of the World Wide Web has further intensified security risks for businesses, both in-house and otherwise. The DSCI (Data Security Council India) Annual Information Security Summit held in December 2017 brought to light the growing need to address the security issues. This summit led to companies, specifically in India, stressing on the need for data integrity certifications. With the dependency on offshore increasing, security solutions are rapidly evolving to address customer concerns.
Offshore Development Trend #3: Cloud-Computing Technology
Though Cloud Computing has been around for a little over two decades, it has begun to gain popularity only in the recent past.
A study that was conducted by International Data Group (IDG) stated that 69% of businesses use cloud-computing technology in some capacity. Another 18% of businesses are looking at implementing cloud-computing solutions to enhance the quality of services provided. It is said that organizations that invest in cloud technology enjoy 53% faster revenue growth as compared with their competitors.
Cloud computing ensures a dramatic and significant increase in overall profit and customer satisfaction. Incorporating cloud computing automatically makes the business reliable, with most services maintaining an uptime of 99.9% on an average. This leads to the services being available 24×7 and cloud-based applications can be launched anywhere, at any point in time. Cloud also offers flexible facilities which can be tweaked depending on the circumstances of a user. This would mean that the capacity of a cloud-based service can be shrunk depending on the needs of a user, which in turn leads to a reduction of costs for the business.
Other advantages of migrating to cloud computing include automated updates, enhanced security and collaboration. It is expected that cloud technology will become one of the dominant trends in outsourcing over the next few years, with offshore development teams focusing on increasing productivity using cloud technologies.
Offshore Development Trend #4: Increase in the use of collaborative tools
Collaborative tools were introduced to help a large number of individuals support each other in accomplishing a common objective. With the increase in offshore development, collaboration tools are now being seen as a bridge between onshore and offshore teams of a business. Keeping up with today’s business environment, app developers are now working on communication and collaboration tools. This growing trend will ensure that businesses that invest in an offshore team do not have to worry about miscommunication, time management, and costs. Here are some of the tools that will be used at a large scale to build a strong offshore team:
Trello is a collaborative project management and storage tool. Possessing an intuitive user interface, it helps team members collaborate on organizing attachments, conversations, and to-do lists.
JIRA is a software solution for offshore teams that work in software development. It helps team members to modify and customize scrum boards, tracks bugs, and to check the status of projects.
Yammer is an enterprise social network that mimics a collaborative environment, not unlike Facebook or Twitter. It is a platform for team members to upload files, micro-blog and follow up on discussions with other team members from across the globe.
Offshore Development Trend #5: Increasing demand for cutting-edge skills
The overwhelming insurgence of new technologies ranging from artificial intelligence (AI) to blockchain and cryptocurrency creates the need for a business to recruit individuals with cutting-edge skills to stay competitive. The demand for skilled IT workers will continue to grow exponentially, driving organizations to turn towards offshore development teams. Though the focus will continue to be on hard skills, soft skills such as teamwork, communication and leadership will also be in demand.
Studies indicate that a third of businesses are looking at leveraging offshore resources for their skills in the field of machine learning, cybersecurity and AI. Unless software tech advancement hits a roadblock, the demand for outsourced talent will accelerate to facilitate this global transformation of the digital landscape. This also means that developers must acquire cutting-edge hard and soft skills to compete in the industry.
Offshore Development Trend #6: Blockchain Technology
Since 2017, blockchain has played out as one of the most interesting technological trends in the world. Healthcare organizations, the telecommunication industry and media houses, among many others, are looking to invest in Blockchain technology to enhance their business models. Not only has Blockchain attracted the attention of financial firms and banks, but it has also created quite a ripple in the IT industry. Advantages of using Blockchain include increased resilience, reduced costs and complexity, increased speed of digital transactions and reduced probability of data duplication.
With the ever-increasing need to adopt Blockchain by organizations, software developers with expertise in the field are going to be in high demand. This automatically turns the focus to offshore developers with Blockchain experience to work on projects that require the incorporation of Blockchain principles.
Studies indicate that trends in the IT Industry have been ever changing. History suggests that no technological disruption in the market has lasted for more than 3-4 years. Offshore IT companies, especially in India have always come towards the later stage of any technological wave. The Y2K boom, COBOL-based banking platforms and the current replacement of legacy systems with the latest architecture have all been captured by Global MNCs and the Indian IT industry to develop capabilities in those specific domains. However, since 2014, we have seen the emergence of SMAC (social, mobile, analytics and cloud) where India has emerged in the forefront of innovation in the field.
The increasing dependency of companies on offshore teams coupled with unexpected industry trends introduces a new set of challenges. Executives constantly devising strategies to make the most of their partnership with offshore development teams. That being said, there are a few offshoring strategies that hold good irrespective of the IT industry dynamics. Here are a few for consideration, when implemented, will help a business achieve maximum return on investment:
Offshore Development Strategy #1: Share the BIG picture
Often, businesses tend to view an offshore team only as an execution partner for a system or function. An approach like that would mean that the team is unclear about the organization’s long-term vision, objectives, and goals. Instead, clearly communicating the vision of a project to an offshore team will make the team members feel invested in the process of developing a product or service. This leads to distributed team members working as visionaries towards the success of the project, and the business as a whole.
Offshore Development Strategy #2: Create a culture of belonging
A success strategy that owners of businesses across the globe follow is to create a culture of belonging between the onshore and offshore teams to instil in them the feeling of working towards the same goal. If a client promotes a healthy engagement between the onshore and offshore teams, it creates a unified sense of belonging across time zones, borders and hierarchies. Making every member feel included and appreciated consolidates the vision of the organization, creating a win-win situation, both for the client and the offshore development team.
Offshore Development Strategy #3: Respect the offshore team’s expertise
The increasing demand for cutting-edge skills will lead to offshore team members coming up with new and innovative ways to tackle a roadblock in the development process. Some employers practice a very hands-on approach with their offshore resources which may not always be the best course of action. Du Nguyen, VP (Global Partner Strategy) at Acxiom in his article about offshore work harmony talks about how asking an offshore team for insights can improve processes and services. It is vital that businesses make use of the distributed skillset of the team that it hires. Their professional judgement can be used in implementing features that will help the business go the extra mile.
Offshore Development Strategy #4: Communication is the key
Working with an offshore team would mean working with a virtual team in a different time zone. In such a scenario, effective communication remains the number one issue. The best way to avoid this is to create an environment for communication between onshore and offshore resources where individuals can collaborate effectively. With the introduction of collaborative tools in the market, this process becomes all too easy.
While emails can be sparingly used for schedules, notes and commitments, productivity tools such as Trello and JIRA make project management a breeze. Incorporating these tools reduces frictions between teams and documents the progress of a project, no matter how insignificant.
Offshore Development Strategy #5: Establish consistent processes
A company that recruits an offshore software development team faces the risk of inconsistent process deliverables. Software development process is usually implemented differently by different individuals. Unless a common consistent set of practices/standards are put in place, chances are that procedures such as requirement gathering, coding, and testing may not be standardized across different teams. A lack of standard practices, especially in the development cycle will lead to discrepancies in the quality of the project.
Though an offshore team is a virtual team, working with them is a new-age reality. Bridging the distance between different time zones and geographical locations, offshore recruitment of resources has now become an everyday scenario for countries like America and Europe. At the end of the day, a company’s goal is to recruit the best people for a job, irrespective of their geographical location.
Keeping up with the ever-changing offshore trends can be quite a task. However, the benefits of collaborative efforts are well-known and understood. Zeroing in on an offshore company to develop software as per the requirements of business is not easy. The wide array of options available may seem a little daunting, to begin with. While cost and quality are the key factors to be considered, the recruiting organization must follow a consistent process of selection to reach out to the right offshore team to outsource their software development needs. By considering factors such as the order of offerings, performance, credibility and reliability, an eligible offshore development partner can be chosen.
By keeping abreast of evolving technology trends and following well thought-out strategies, businesses can ensure they have the right ingredients for success irrespective of any challenges which may arise.
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