What's Onshore Outsourcing?

Onshore outsourcing refers to when a certain job / project is sent to a locally based outside product / service supplier.


What's Offshore Outsourcing?

Process of exporting a job / project to a supplier based outside the mother company is refered to as "offshore outsouring"


How Do I Choose?

Both offshore and onshore outsourcing is geared towards achieving one common goal - which is to achieve business goals / outcomes with significantly lower production costs and inhouse operational costs.


There are certain advantages and disadvantages of both these models.


ONSHORE DEVELOPMENT
ADVANTAGES DISADVANTAGES
Locally based - Easy access to your development team Higher labour costs
Communication / language Adhere to local regulatory requirements
Low touch involvement Project normally run over budget

Onshore more does keep it simple. Often projects are managed and delivered by one vendor, removing 3rd party risk. Additionally, by keeping it local, the IT vendor is most likely to have an understanding of the client's target market and therefore functional needs.


Onshore delivery does presents one major complexity to the clients which is the cost of delivery. Onshore is up to 70% higher vs. offshore, as labor costs and an abundance of talent is 3rd world countries as opposed to high wage bases and skill shortages in the developed world.


High development costs also present project risk as there is less flexibility for scope and development changes without incurring significantly higher costs, which often results in projects being abandoned as they become unfeasible.


OFFSHORE DEVELOPMENT
ADVANTAGES DISADVANTAGES
Low Cost Lack of physical interaction with the team
Better project experience Communication barriers
Agility and flexibility Time differences

Traditional Offshore development meant the process of engaging and outsourcing your development needs, whether it be: web, mobile, custom development to a offshore company, most likely in a 3rd world country.


The main advantage was significant cost reduction as companies saved on labour costs and internal administration costs (HR, Office space, equipment etc.). Of late, companies also engaged in outsourcing to gain access to qualified staff as skilled labour shortages have become more frequent in developed countries.


There are however, multiple challenges and disadvantages by engaging in a offshore model:
1. Multi party risk - general 3rd party risk by engaging with an external company
2. Knowledge Transfer Issues - The majority of offshore projects are overtime and ultimately budget as a result of gaps that arise when transferring requirements.
3. Language & cultural norms - common language gaps or assumed cultural norms/expectancies can result in project delays or non-performance.


What's a Hybrid Outsourcing Mode?

At Maytech, we run a proven Hybrid Outsourcing Model - where we have setup offshore delivery centres, but also operate onshore business consultancy and project management services.
This model has helped us enormously to bridge the gap between Offshore and Onshore outsourcing models - while providing a worldclass business solution at a lower cost.


We employe some of the best brains in the industry to ensure best practices are applied throughout the product development lifecycle.


To know more about our own Hybrid Outsourcing options - please contact our Australian head office on +61 3 9020 1497


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