Pros and Cons of Offshoring and Yourshoring: Which One Is The All-Pro Choice? (Hint: It’s the second one.)
In our last blog post, we put on our scuba suits and took a deep dive into the differences and similarities between Offshoring, Onshoring, Nearshoring, and (the highly spectacular) Yourshoring. In this post, we’re going to narrow the focus to Offshoring vs. Yourshoring—and outline the benefits and nuances of both.
Just like you do when you’re weighing any other important life decision, we’re going to make a pros and cons list. When we get to the end of it, you’ll see that Offshoring has a handful of pros and a very long list of cons. Yourshoring on the other hand, is as all-pro as Tom Brady. (No, for real, there are no cons. Read on.)
Here’s how we break it all down:
What is the difference between Offshoring, Offshore Outsourcing, and Outsourcing?
The term Offshoring is flexible and fungible—a bit like the unsung superhero Plastic Man (who everyone seems to co-opt for their own purposes). The word is used in manufacturing, supply chain management, call centers, and much more.
From a technology perspective, Offshoring means finding development talent (wicked smart developers and engineers, for example) that are not physically located in the same country you are. Say you are a high-flying startup based in Austin, TX; when you leverage killer developers in Romania or Brazil, you’re Offshoring.
Sometimes Offshoring is referred to as “Offshore Outsourcing” which can be confusing because there is also just plain old “Outsourcing.” It’s nuanced, but a simple explanation is this: Offshoring is used when an ongoing retainer relationship is needed—this is your far away, dedicated dev team. Outsourcing is the short-term, project-based solution—this team hits it and quits it. (Want to learn more? Read this incredibly insightful post we wrote and you’ll be fluent.)
What are the pros of Offshoring ?
There are myriad reasons why businesses use Offshoring. Here, we give you a brief synopsis of the most common reasons why:
- Lower labor costs: If you live in America or Western Europe where the cost of living is among the highest in the world, Offshoring allows you to tap into markets where talented labor pools are just as deep, but way more cheap(ish).
- Access to specialized expertise: Sometimes your home market has a shallow bench, especially when you’re in search of specific technological expertise. These specialists can usually be found Offshore. Two good examples are Artificial Intelligence and Machine Learning. Pound for pound, Eastern Europe has the richest density of experts in these fields, which is why Offshoring to countries in this region makes sense for a product company that relies heavily on either of these two technologies.
- Round-the-clock development: Some software companies intentionally build offshore development teams in time zones where there is only a small overlap in working hours. This is because—much like a factory that runs a day shift and a night shift—companies can often double their product velocity by having more hours of each day devoted to software development.
- Tax benefits and other financial incentives: Countries that are actively trying to induce foreign investment will often offer special incentives (such as tax breaks) to entice companies to set up shop. When combined with lower labor costs, these incentives can provide even more of a cost advantage to Offshoring.
What are the cons of Offshoring?
Alas, nothing in life is perfect (except, of course, my darling spouse…hello, dear). Which means the list of inherent challenges to Offshoring is a long one. Let’s cover some of the low points here:
- Limited control of the team:Your offshore team will be able to do complex work. But you won’t have full control over how that work is done—you can’t really dictate the hours that the team works, the culture in which they work, or how much each team member gets paid.
- No choice of talent: The vast majority of companies that use an offshore development agency to help them manage (and often mismanage!) their team, don’t get to select the specific developers that get assigned to their project. This means those long-term developers you need aren’t necessarily going to last because of a poor skills fit or cultural alignment—hence the next bullet point. Bummer, right? It’s hard to build custom software when your team isn’t custom. (We’re putting that on a t-shirt, stat.)
- High turnover: Running a globally distributed engineering team is hard, but it gets even more difficult when there is constant churn of developers. Sadly, the industry average for offshore development is about 40%. Which tells you that every time you hire 10 developers, four of them are likely to bail on you each year, slowing down your development trajectory and causing a distraction for the ones who stay. Left unchecked and unmanaged, poor retention will eventually squash any chance of offshore success.
- Lower quality if you aren’t careful: As the old adage goes, “Out of sight, out of mind.” In offshore software development, if you don’t want to become a cautionary tale, you have to be extremely careful. Pick an offshore firm that can prove to you how they ensure high levels of performance.
- Language and communication barriers: Here in America, we have a dismal record of teaching our own population a second language. Europe is better at it—many countries speak their native language as well as English. Some are not as proficient (like Asia), and still others land in the middle (Latin America). Sourcing the right talent with the right English skills takes time.
- Cultural and social challenges: In addition to the language challenges just noted, you may have to overcome cultural barriers with your offshore team such as attitudes towards work and deadlines, and your preferred communication style. You know what happens when you assume…so just know you’ve got to lock the right mechanisms in place from the start or you’ll lose a lot in translation.
- Time zone considerations: Rocking around the clock is a plus, but a team in a different time zone can be detrimental to company goals and values, too. Zoom and Slack mean that global collaboration is easy (and expected), so many companies are prioritizing working together as a single team—at the same time. This is often referred to as Nearshoring.
- Security and infrastructure concerns: If the agency helping you build your offshore team is also based overseas, you might be subject to their security protocol instead of yours. This can open you up to risk since your development efforts are not contained within the same environment.
- Legal exposure: Do you understand all of the local tax laws and regulations in the country from which you’re hiring your offshore team? (Fun fact: We do.) The number of required vacation days, government pension contributions, payroll taxes, accounting treatments, IP protection–all of these are different, and all of them can trip you up when you hire developers offshore. You want someone managing the regulatory process who knows that market inside and out.
How do you keep the pros and erase the cons?(Hint: Yourshoring!)
We feel your pain. When we ran our own SaaS-based startups, we faced many of the above pros and cons when determining our own offshore development strategy. It was frustrating—maddening, really. Enough so that we decided to come up with a better way: We call it Yourshoring.
Think of Yourshoring like Offshoring 2.0. It’s an advanced version, the one you want with all the good stuff and none of the gunk. Yourshoring amplifies all the advantages of Offshoring while putting in place the people, processes, and best practices needed to fully negate all of its disadvantages.
TurnKey’s Yourshore model is new, unburdened, and the technically savvy way to build high-performing remote software development teams. This is because it’s the first—and only—framework that is built entirely around YOUR needs. This is YOUR team, YOUR rules, YOUR vision, YOUR terms. Exciting, right? I know. Let’s dig in right here, right now.
Yourshoring and its All-Pro list
With Yourshoring, you can ditch the disadvantages of Offshoring. Trust your build to TurnKey and watch your team take your product into the Hall of Fame. Here’s what you have to look forward to:
- Fully dedicated teams: Yourshore teams are fully dedicated to you and you are in control. You set the hours, the culture, and the cadence. Another benefit—teams that are embedded and integrated into your organization are emotionally invested in your collective success. Their loyalty lies with you. (That sounds like a random Star Wars reference, but it’s true. The force will be with you.)
- Completely customized talent: We custom recruit every one of your developers and engineers from square one so that you always get a perfect match. Our model is predicated on getting you the exact right fit for your team and your product goals. Yourshore supports YOUR mission and YOUR vision.
- Dramatically reduced churn: We understand that remote software development doesn’t work if your team keeps turning over. That’s why TurnKey has developed a robust talent retention program that provides a wide range of benefits (both personal and professional) and acts as an outlet for developers to raise any concerns before they can fester. The result? TurnKey customers enjoy less than 15% churn versus the industry average of 40%.
- Higher quality: Our rigorous recruiting and screening process is intentionally designed; only the top 3% of talent in Eastern Europe and Latin America make it to final interviews for your team. We also help onboard your team using our best practices, and optimize your quality control by conducting regular one-on-one discussions with each developer.
- Breaking the language barrier: The candidates we bring to the table have a high level of English competency and a communication style that vibes with the way we do it in the United States. We further supplement this approach by providing free, Advanced English lessons for all of your developers so that they are constantly improving over time.
- Multiple time zones:A key tenet of Yourshoring is using remote teams that best fit the priorities of your organization. This means that whether you need around-the-clock development or a team in a closer time zone (or both!), TurnKey has you covered. We’ve got every option, and we’ve got your back—even if what you want to do is mix and match different teams in different regions.
- Your security infrastructure: Yourshoring means Yoursecurity. TurnKey developers work entirely within your security environment. Since you call all the shots, you determine what protocols, systems, and processes within which your entire team operates. There is no room for unknown risks or unanticipated security incidents.
- Zero legal exposure:Local laws and regulations are tricky, and most offshore firms don’t go the extra mile to make sure you are completely protected from all liability. Not TurnKey. With our Rest Easy! promise, we not only make sure that you are compliant with each country’s laws where you have developers, we also ensure you are entirely shielded from any potential exposure. (And never fear, you still get every last stitch of the IP.)
- White glove customer service: Most offshore firms are based overseas, and contacting senior management is difficult (if not impossible). That’s not the Yourshore way. TurnKey is based in Silicon Valley. When you Yourshore with us, you hold the cell phone number of every senior executive at TurnKey, so you can get a response to any issue or question when you need it.
Some final thoughts
Like anything else, when it’s custom-made, it just feels better. No blisters, all bling. Offshoring is good, but is it good enough? Is it right for you? Your product isn’t third-string, it’s a starter. Go all-pro with Yourshoring. You’ll get what you need, the way you need it. And TurnKey will make sure your product shines.
When you hire an offshore team, you’ll enjoy cost savings, potential tax benefits, specialized expertise, and access to round-the-clock development.
Offshoring gives you a team you can rely on for technical expertise. But you have to let go of hiring control, cultural fit, communication skills, work ethic, control over security, and potentially, sleep (time zone differences are real).
This depends on your company and your product. Saving money is obviously good, as is the specialized expertise. But the list of cons (see our recap) is daunting.
Apart from the standard communication and cultural misalignment problems frequently faced, there are some serious legal exposure and security issues that come up with a team you don’t have complete control over. (Risk averse? TurnKey’s Yourshoring solution is here for the taking.)