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Onshore vs. Offshore IT Solutions: Weighing the Benefits

Increasing numbers of IT leaders are opting to offshore some or all of their services. 

It offers the chance to reduce costs and free up time and resources to focus on other business functions. 

But is it worth it? 

What factors do you need to consider to go down this path?

In this article we weigh up the benefits and drawbacks of onshore vs offshore to help you make a more informed decision about how you should best be delivering your IT services.

Offshoring advantages

1. Cost Reductions

The biggest benefit to offshoring services are related to potential cost reductions. These are based around the potentially lower salaries that can be paid to offshore workers to perform the same services at lower cost. 

2. Budgeting efficiencies

There are additional benefits that can be gained from offshoring due to potential budgeting benefits by changing costs from fixed to variable. 

3. Reduced training

There is also the possibility to reduce or eliminate training costs from within the IT sector of your workforce, as any training or upskilling costs are borne by the company you’re outsourcing to. These cost savings can then be passed onto your company’s local customers and clients. 

Onshoring advantages

1. Quality Control

When people stress the advantages of onshoring they are usually talking about quality considerations. If you can source high quality work or services at a cheaper price, then you don’t have an issue. But in many cases getting something at a lower cost means either accepting lower quality service or at least increasing the risk of that happening. 

As more international organisations look to offshoring to reduce costs, this leads to increasing prices over time, often to the point where offshore services may not in fact be that much cheaper than those offered locally for the same level of skill. Ultimately you should be trying to focus on quality of service for both the parent company as well as the consumer as the end goal. 

2. Efficient communications

Onshoring your services removes many of the complexities and challenges related to communications that can come with offshoring. This includes barriers from time zone differences and cultural differences or norms in different countries. 

3. Reduced legislative considerations

Working with international providers can also come with legislative or regulatory differences between different countries. This is especially the case when there are shifting landscapes such as changes in government or evolving standards or norms in developing countries. 

The third option

At the end of the day, everything comes down to what your company actually needs from its IT services and where the best value lies. Is the greatest benefit to your company going to come from cheaper labour or higher quality? And in seeking cost savings are you really prepared to sacrifice some level of quality?

If you recognise that the quality of your services is of the utmost importance then one of the best options to pursue can be local outsourcing. It means you can maintain close communications with a reputable local provider to deliver a high quality service at potentially lower cost than you could provide internally. 

By working with a partner such as FinXL, you can locally outsource and free up resources to focus on more critical aspects of the business. While this option won’t likely be as cheap as offshoring, it does provide you with far greater control over quality and communications and could just be the perfect mix where you can take advantage of the key benefits of both onshoring and offshoring. The best of both worlds.

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