All you need to know about offshoring models and how to choose the right one.

Offshoring is a terminology that has been around since the 1970s; however, it gained widespread popularity as time moved forward. This is because offshoring gained strategic importance, especially in the case of tech startups. Following are some of the most prominent benefits offered by offshore in IT:

  • Access to a broader talent pool
  • Faster go-to-market
  • Flexibility to extend the runway
  • Round-the clock operations
  • Cost-effectiveness.

What is offshoring?

Offshoring may require setting up additional offices in another country, hiring an offshore software development company, or simply hiring an expert at a foreign location. It is usually done with the intention of building a highly specialized & dedicated team. The term offshoring may be classified into three broad categories – outsourcing, ODCs/GDCs, and freelancing. Now, let us dive deep into each of these models to help you choose the one that suits you the best.

Outsourcing

Outsourcing refers to a company availing the services of an offshore development firm. Clients opt for offshoring primarily considering the following reasons: expertise, bandwidth to handle work, and quick output. This is usually a short-term contract wherein the offshore team works for your organization; however, you may or may not interact with this team directly but with a company like Braves Technologies you can.

Hiring people for a project or task that does not directly impact core business may turn out to be a costly affair. Outsourcing enables access to the necessary expertise without having to get into the hassles of hiring & onboarding. Moreover, a contract ensures that the quality is met within the timeline.

Pros

  • Outsourcing lets you focus on productivity and faster output
  • You can access the expertise without actually hiring or onboarding candidates
  • Works for short-term goals perfectly
  • No responsibility for work management.

Cons

  • No control over hiring. Hence, talent quality cannot be assured
  • Indirect collaboration with the team may lead to miscommunications
  • Change in requirements may result in contract management issues.

ODC/GDC

Offshore Development Centers (ODCs), also referred to as Global Development Centers (GDCs), are branches of established companies that expand operations in countries like India. Setting up an ODC involves a long-term scale-up plan for the organization to complete its projects cost-effectively. ODCs are capable of handling development, QA, and several other business processes. The ownership of employees & the infrastructure remains with the company. In most cases, the offshore team works parallelly with the onshore team, just like its extension.

Thus, the organization needs to establish a legal entity to operate in another country. Furthermore, it needs to have an HR team, a management team, well-defined processes, and policies compliant with that country. Companies primarily prefer to have ODCs for three primary reasons – cost-saving, building large teams overseas, and a requirement for more technical expertise.

Pros

  • Large team with top-quality talent
  • Organizations get a dedicated team
  • Convenient to build culturally suitable teams having common goals
  • Complete control over the team.

Cons

  • Works best for large teams of more than 50
  • Difficult to scale down if needed
  • Takes a longer time to set up an ODC
  • Heavy initial investments.

Freelancing

Freelancing usually involves a small piece of work shared across for completion. Freelancers are individuals who have proven expertise and take up short-term projects. They are not dedicated employees of an organization. The span of employment usually ranges from a few days or months to a year.

Jobs that do not need much collaboration and can be done independently are more suitable for freelancing. If the work duration exceeds six months, full-time employees are advisable.

Pros

  • Freelancing lets you focus on productivity and faster output
  • Easy to scale the number of freelancers up or down
  • Freelancers are experts. Hence, they can work independently.

Cons

  • Finding a skillful freelancer can be a hit and a miss
  • The availability of freelancers depends upon projects they may be handling
  • Not suitable for collaborative work.

The B-O-T Model

At Braves, we follow the Build, Operate, and Transfer (B-O-T) model, which is effective for long-term projects. We provide offshore staffing solutions, build high-performing teams for our offshore clients, and operate it on their behalf. To ensure smooth operations, we assign an exclusive POC between you and your team in India. Quarterly feedback on the hired candidates is also recorded to evaluate their performance and skills.

After evaluating the offshore team’s performance, most of our clients consider expanding operations in India. In this scenario, we transfer the offshore team’s ownership to them and continue providing them with the necessary support. All management, operational, and HR processes are then transferred to the client. Until then, they reap the benefits of a dedicated offshore team without setting up a legal entity in India.

Comparative Chart of Offshoring Models

Pros Outsourcing ODC/GDC Braves Freelancing
Direct communication with an offshore team for effective collaboration No – Usually, a Team Manager is the bridge between you and the team Yes – As it is a dedicated team Yes – You can collaborate with every offshore team member Yes – Possible depending on the availability of the freelancer
Control over the team for quality assurance No – The outsourced party has complete rights over the team Yes – You hire team members and have the ownership of the team Yes – You handpick the team members, and they work as an extension to your onsite team Partial – Depending on the expertise of the freelancer
Accommodation to changing requirements No – The legal contracts are usually rigid to accommodate changing requirements Yes – You can make changes to the team according to requirements Yes – The team being an extension of the onsite team, can accommodate new requirements easily Depends on the expertise of the freelancer
Responsibility of Operations and Management No – The outsourced party takes care of both Yes – You are responsible for all the functions No – Braves takes care of management and operations No – Freelancers manage their own work
Focus on productivity and outcome Yes – You don’t have to partake in the process No – You have to look after all processes right from searching, onboarding, and managing the team apart from work Yes – The secondary processes, including hiring, onboarding, and deliverability, is taken care of by Braves Yes –  – Freelancers need to deliver as committed

 

Thus, with the B-O-T model, you wouldn’t have to go through the hassles of outsourcing, setting up an ODC, or hiring a freelancer. You can start with a small team of 2 to 5 engineers to set the foundation for scaling up. Moreover, the model works perfectly even if you scale up your workforce. Furthermore, you can collaborate effectively with your offshore team, have control over work quality, accommodate changing requirements, and focus on productivity & outcome through this model without worrying about management & operations

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