Offshoring: 5 crucial things to look out for when offshoring work

July 15, 2020

Offshoring tips from Enterprise League

Andy Lee, co-founder of Decade3, discusses the practice of offshoring and how to get the most out of it for your business.    

The practice of moving business processes offshore has become quite popular, as businesses and owners look to capitalise on different costs of labour as well as gain access to a greater talent pool. The challenging business environment that has resulted from the Covid-19 pandemic could further increase this trend, with many companies struggling with cash flow issues.

Despite widespread practice by companies, offshoring often brings negative connotations and is often blamed (sometimes unfairly) when things go wrong or businesses fail. The reality is that, like any other function, the success of offshoring comes down to how well a business is run and the decisions taken during its implementation.

Methods to offshore work successfully

Below we’ll explain the steps you need to follow in order to offshore work successfully. Failing at at least one could greatly undermine the work.

Find a compatible service provider

Choosing the right offshore provider for your business is just as important (if not more) as employing a direct-hire in your office. Unfortunately, no amount of money or time can make up for skipping due diligence when it comes to this. Here are some areas of importance when it comes to selecting a potential offshore vendor:

Financial: Be very clear on price and levels of service. If the company is not able to describe or explain their services and costs to you, they’re probably not the right fit!

Skills: Verify that the company has the appropriate skills to execute the task at hand and if possible acquire references from previous projects or work. Check their ratings from review sites. 

Vendor Goals: What are their objectives? If you’re looking for quick wins to take your business through a particularly challenging period, you probably don’t want to sign up with a vendor who will lock you into an expensive long-term contract with little added benefits.

Country Analysis: You need to know about where your work is going and what the business and political environment is like. Some countries have invested more in certain industries than others, and offer fewer restrictions and regulations for foreign firms doing business there.

There’s nothing more costly, time-consuming, and frustrating than learning that you’ve hired the wrong offshore vendor for your projects.

Invest in the best collaboration tools

The importance of having standardised communication software and services when working across different time zones cannot be emphasised enough. Communication channels need to be crystal clear – in fact, this should be the case even when not sending work offshore!

Best does not have to mean most expensive – below are some great platforms that allow teams to enhance remote collaboration:

Communication and messaging

  • Slack
  • Whatsapp
  • Skype
  • Zoom

Project Management

  • Trello
  • Jira

Documentation or Source Code

  • Github
  • Google Drive

Most of these platforms also offer paid features depending on your business needs. These are definitely worth considering if you have larger teams or projects which may require more security, however the free tiers are usually sufficient for most small to medium sized enterprises.

Recognise cultural differences

It’s inevitable that cultural differences will occur between teams from different countries. There are whole studies dedicated to the differences between low and high-context cultures, and it would be folly to assume that a business seeking to offshore wouldn’t face these challenges. In dealing with high-context cultures, recognise that emphasis is placed on emotions and trust as opposed to words, and they invest much more effort into personal relationships – possibly even taking them into account in work or business decisions. A simple “yes” may not always be interpreted in the same way by the other party (sometimes even in written agreements), which is often a source of much misunderstanding between teams.

Working methodology also matters when attempting to bridge the cultural gap. For instance, in Asian countries such as China, India or Malaysia, employees respond better in general to strict processes and well-defined tasks. In most of America and Europe, much of the work is broken down into smaller tasks to be executed within a certain time frame, taking into account the possibility of change during the process. Having both sides accept these differences and then applying the appropriate framework for work will minimise friction between teams during the offshore process.

We live in an age when many have the opportunity to work and live abroad, so in many ways these differences have minimised as some choose to return to their parent country. Having said that, it’s still important to establish and introduce your company’s culture and values early on to clear up any issues to prevent them getting out of hand.

Clearly identify your end goal

If you cannot precisely identify what services to outsource or which partner can best provide these services, you can hardly expect them to find the answers for you! It’s important to recognise that moving work offshore does not mean paying somebody else to think for you – as a business owner, you still need to make these decisions and outline exactly what you need from your offshore partners.

Make a list of everything your business can or can’t do, and detail what you should expect from your offshore team, and how they would go about accomplishing your tasks with their resources. Also be mindful of their limitations, as they are not necessarily able to solve all of your company’s challenges, only a very specific business process.

Keep in mind that your vendors cannot anticipate your requirements and expectations. The more specific you can be, the better your partner will be able to contribute and add value to your business.

Turn time difference into a plus

One of the biggest advantages available to businesses who choose to offshore is that they’re able to add more hours of service to their working day. At Decade3, we’ve found that we’re able to provide 16 hours of software development services in a day due to the 8 hour time difference between Kuala Lumpur and Leeds. Take advantage of this by scheduling overlapping tasks that maximise employees’ visibility over your service or product. When something goes wrong, clients may expect to speak to a technician with knowledge of a system instead of a call centre operative. In doing this, your business also reduces the need for on-call or out-of-hours fees.

It’s also possible to increase productivity now that your business is able to work around the clock. Prioritise structuring work in a way that team members are able to execute them independently. Don’t just agree in general on what needs to be done, but then leave it up for discussion during the implementation- sort this out before the start! Also explore the full range of automation and services offered by collaboration tools like Jira and Trello, and introduce basic retrospectives and reviews of work, in order to make the most of your team’s extended capabilities.

Do bear in mind that offshoring need not always mean working with partners across distant time zones! There is also the practice of nearshoring, which is transferring work to a nearby country. While the basic concepts of moving business operations abroad remain, this might appeal more to entrepreneurs or owners who might consider it challenging to work with colleagues from an extremely distant location.

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