Benefits of the offshore in-house vs outsource team model
In today’s global economy, businesses continually look for ways to optimise their operations and stay competitive. Building an in-house team is a traditional way companies build a team of developers, but two strategies have challenged this approach in recent years — outsourcing and offshore in-house teams.
More recently, offshore in-house teams have emerged as a key strategy for companies looking to build tech teams that leverage the advantages of both offshore and in-house teams. To understand why they are gaining popularity, let’s first look at how these teams differ and the benefits of their respective models.
In-house vs outsource teams: how they differ
First, let’s take a closer look at outsourcing. It’s the practice of hiring an external company to perform specific tasks or provide services, which may or may not need access to the same tools, systems, and processes as the in-house team. In this model, a company contracts a third-party vendor to provide services or expertise for a specific project or function. The external company is responsible for managing its team, meaning the hiring company has a limited ability to set project goals, provide guidance, and monitor progress.
An in-house model, on the other hand, offers companies greater control over their teams because they have their own team lead, project manager, or department head, who reports to an internal manager or executive directly. Offshore in-house teams function in the same way. The only difference is they are in a different location than a primary team as they are full-time colleagues who work offshore. They typically also have access to the resources of in-house teams, which allows them to work seamlessly with their counterparts.
So, it’s clear that while they are different, offshore in-house teams can function as a dynamic extension of a company’s in-house workforce. Now that we understand how these two models differ, let’s ask the question, what is the value or the benefit of an offshore in-house vs outsource model?
The pros and cons of in-house
An in-house team offers several benefits, including greater control over the project and development process, the ability to work collaboratively with other departments within your organisation, knowledge transfer resulting in greater institutional know-how and the opportunity to foster company culture and team-building. With an in-house team, you can manage the team’s work schedule, project priorities, and resource allocation to ensure the project meets your specific requirements.
This close collaboration can result in more effective problem-solving and innovation. In-house teams also allow for knowledge transfer within the organisation. Additionally, the culture and team-building fostered by an in-house team can result in a lower turnover rate and a more committed and motivated team. Unfortunately, in-house teams are not cost-effective, and many companies need help finding skilled workers locally.
The pros and cons of outsourcing
The greatest benefit of outsourcing is that it’s a cost-cutting measure. However, it also allows companies to tap into specialised skills and expertise they may not have in-house, enabling them to complete complex projects more efficiently and effectively. Additionally, outsourcing can provide access to the latest technology and equipment, which can be expensive to acquire and maintain in-house. Sadly, outsourcing can be problematic because it often involves working with third-party vendors who may not understand a company’s internal processes or culture deeply.
This can lead to communication breakdowns, delays in project delivery, and quality issues. In addition, there may be language barriers, and differences in work culture that can make collaboration difficult. Moreover, outsourcing may lead to losing control over the project and intellectual property, which could lead to security risks. Finally, outsourcing can be challenging to manage, and if the vendor doesn’t deliver on expectations, it can be costly and time-consuming to find a new partner.
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The pros and cons of offshore in-house
Offshore in-house is the best of both worlds. It can also help companies streamline their operations, improve quality, and reduce time-to-market for new products and services because it combines these models. With this form of offshoring, companies can tap into specialised skills and expertise that they may need to gain in-house while also benefiting from greater control over the project and development process. This allows for collaborative work with other departments within the organisation, keeps the company culture intact, and makes for a more committed and motivated team.
And by leveraging offshore resources at a reasonable cost, companies can run their operations more smoothly. Although offshore partnerships may raise concerns about communication breakdowns, project delivery delays, quality issues, language barriers, time zone differences, loss of control over intellectual property, and challenging management, the right partner can effectively address these concerns.
So, when examining an in-house vs outsource model, we can see that offshore in-house teams are designed to deliver the same high-quality work and achieve the same goals as in-house teams while offering more significant benefits such as access to cost-management solutions, a wider talent pool, and increased flexibility.
Offshore in-house teams: addressing common concerns
Offshore in-house teams are a less well-known engagement model, so they suffer from many misconceptions. These usually come from people associating it with low-quality outsourcing alternatives. Thankfully, that’s not the case at all. The words “offshore” often conjure visions of potential for communication issues. But as offshore in-house teams function the same way as their in-house counterparts, they’re not issues. The same goes for culture. Like outsourcing, the vendor may be located in a different country. However, the processes, company culture, and priorities are shared, unlike outsourcing.
Offshore in-house teams are regarded as full-time colleagues that are fully-integrated into a company’s culture and processes. They are not contracted for a specific project or function but are a permanent part of the organisation. This makes them an extremely appealing and viable option for organisations looking to optimise their operations. This level of cultural integration is not possible with outsourcing due to the lack of control.
Another concern for companies is the quality of work that offshore in-house teams can deliver. However, with proper training and management, offshore in-house teams can offer the same quality and expertise as in-house teams (if not better) while providing access to a wider talent pool of individuals. And as they are hired specifically for your company you get to vet the quality of the candidates.
The right partner can help
You might ask, why is it so important that companies find a reliable offshore partner to help them build a strong team? Well, it’s essential for companies to also invest in the proper training and support for their offshore in-house teams to make sure they have the same resources available to them as the local in-house team. An offshoring partner on the ground can make this happen. They’ll ensure communication between local and offshore teams by developing a clear communication plan and using appropriate tools and technologies to stay connected. This includes video conferencing, chat applications, and project management software, allowing real-time collaboration and communication.
The right offshoring partner must have an effective method for conveying the company’s culture and values and work to align others with those values. This fosters a sense of unity and shared purpose across the organisation. And by prioritising communication, alignment, and quality, offshore in-house teams can work effectively with in-house teams and deliver value to the organisation.
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Examples of Successful Offshore In-House Teams
Successful offshore in-house teams have delivered significant value to their organisations. One such example is Automattic, the company behind the popular website platform WordPress. Automattic has a fully distributed workforce, with more than 2,000 employees working remotely from locations worldwide. Despite being geographically dispersed, the company’s employees can work effectively and deliver high-quality products and services.
By leveraging a distributed workforce, Automattic has been able to tap into a wider talent pool and operate with a leaner, more agile structure than many competitors. Another example is GitLab, a software development company with over 1,350 employees working remotely from over 65 countries. GitLab’s distributed workforce allows the company to operate 24/7, with team members in different time zones able to work together seamlessly. This has helped the company deliver software products and services faster and more efficiently than many competitors.
In both cases, the offshore in-house teams function as full-time colleagues, aligned with their in-house counterparts. Through regular communication, collaboration, and a shared sense of purpose, these remote teams can work just as effectively as if they were all in the same office. Overall, these case studies demonstrate the significant benefits of offshore in-house teams, allowing businesses to operate with a leaner, more agile structure. By leveraging offshore in-house teams, companies can build more competitive, effective, and resilient organisations better equipped to thrive in today’s global economy.
More and more businesses seek to leverage global talent pools and expand their software development capacity. Comparing in-house vs outsource teams can be challenging, but offshore in-house teams offer more excellent benefits to organisations. And while there may be some concerns about offshore in-house teams, these challenges can be overcome with the right partner.
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The Scalers is a company that specialises in helping businesses do just that by providing services to support the setup and operation of offshore teams in Bangalore, India. We have some of the best examples of successful offshore in-house teams built across multiple industries. With us, these teams have scaled quickly, providing comprehensive recruitment and operational support, enabling businesses to focus on their core objectives and achieve success without limits.
As companies look for innovative ways to optimise their operations and stay ahead of the competition, offshore in-house teams offer a unique opportunity. By leveraging remote workers as part of their workforce, companies can build more competitive, effective, and resilient organisations that are better equipped to thrive in today’s global economy. As such, organisations must consider offshore in-house teams as a viable option for their workforce strategy.