Main Challenges of Offshore Outsourcing and How to Overcome Them

Is your team overloaded? Are you struggling to find the right talent to execute key projects? In today’s business environment, it’s not uncommon for companies to lack the internal resources to handle every task. Offshore outsourcing can be a strategic solution, allowing you to handle processes that your internal team is not equipped to manage.

However, like any strategic decision, offshore outsourcing comes with its own set of challenges. In this blog post, we’ll explore the main obstacles businesses face when outsourcing work to offshore locations and provide you with actionable strategies to overcome them.

What Is Offshore Outsourcing?

Offshore outsourcing involves delegating specific business processes or tasks to a third-party team located in a different country. This approach allows companies to tap into a global talent pool, often accessing specialized skills that may be scarce or more expensive in their home market.

It’s important to distinguish between outsourcing and offshoring. Outsourcing simply refers to delegating tasks to an external provider, regardless of location. Offshoring or offshore outsourcing, on the other hand, specifically involves relocating business functions to a foreign country, often to take advantage of lower labor costs or favorable regulatory environments.

Outsourcing vs offshoring is a big debate among companies but combining these gets the best of both worlds.

Why Should You Consider the Risks of Offshore Outsourcing?

The risks associated with outsourcing work to talent in other countries are numerous. It is important to consider these risks if you want to maximize the benefits of offshoring. We have curated the top 10 common challenges you will face and how to navigate them.

List of 10 Most Common Offshore Outsourcing Challenges

• Cultural differences
• Time zone differences
• Lack of trust
• Language barriers
• Poor communication
• Lack of transparency and control
• Lack of skills and expertise
• Geographical distances
• Project management
• Data privacy

1. Cultural Differences

Cultural differences can certainly be a challenge for offshore outsourcing. This is because the cultural norms and values of two different cultures can often be quite different, which can lead to misunderstandings and conflict due to cultural barriers. For example, in some cultures, it is considered rude to criticize someone or to openly disagree with them, while in other cultures it is considered polite and respectful to do so.

So if you are working with a team of people from a culture that values politeness and respect above all else, and you come from a culture where it is considered normal to openly criticize someone when you think they are wrong, there may be some tension and conflict.

To combat this challenge, it is important to be aware of the cultural norms and values of the country or region where you are outsourcing your work. You can do this by doing some research online or by talking to people who have cultural understanding from working in that area.

2. Time Zone Differences

Navigating the complexities of time zone differences is a critical consideration for businesses engaging in offshore outsourcing. The potential impact on communication and project timelines can be significant. For instance, imagine a critical bug fix needed in a software application. If the offshoring company is 10 hours behind the client, valuable time can be lost in communication and resolution, potentially impacting project deadlines and customer satisfaction.

Another challenge with time zone differences is scheduling meetings. When one team is working during the day while the other is sleeping, finding mutually convenient times can be difficult. This can lead to delays in decision-making and project progress. Furthermore, tracking work completed across multiple time zones can be a logistical hurdle. Without clear communication and project management strategies, it’s easy for misunderstandings to arise and for tasks to fall through the cracks.

It is crucial to be aware of the time zone differences between your company and the company you are outsourcing to. You can do this by checking a time zone converter online, or setting up fewer meetings and running time sheets for the sake of quicker asynchronous communication.

3. Lack of Trust

When companies outsource to offshore countries, they often worry about the quality of the work that will be delivered, as well as whether or not they will meet their project deadlines and expectations. Many companies are hesitant to outsource work to offshore destinations because of client data security, quality assurance, business strategy alignment, and other security risks.

Fortunately, there are several ways to build trust with your offshore outsourcing partner. One way is to create a detailed project plan and timeline and make sure both you and your partner agree on all the key milestones and deliverables. You can also conduct regular reviews to ensure that both parties are happy with the progress being made. Finally, you should always make sure that you have a good communication channel in place so that any issues or concerns with offshore workers can be addressed quickly.

4. Language Barriers

Language barriers can cause communication challenges between the parent company and the third-party vendor. Miscommunications can lead to frustration on both sides and can ultimately impact the quality of the work that is delivered.

That said, with a little effort and planning, most language barriers with offshore vendors and foreign workers can be overcome. One way is to use translation software or services, which can help translate text and documents between different languages. Another way is to use an interpreter, who can help facilitate communication between workers from different countries.

By using these tools, businesses and offshore vendors can overcome the language barrier and reap the benefits of offshore outsourcing. Also, you can simply choose foreign companies with a great command of English. This way, your operating costs won’t increase and you’ll access outsourced workers with specialized expertise and great language skills. 

5. Poor Communication

Poor communication can be another challenge for offshore outsourcing. Misunderstandings and incorrect assumptions are common when working with teams that are geographically dispersed. This is especially true if your team is working in different time zones.

Miscommunication can lead to delays and mistakes, which can impact the project timeline and budget. The best way to overcome these challenges is to establish clear communication channels, timesheets, and protocols early on, and to make sure that everyone involved is following them. It’s also important to build trust and mutual respect between the teams and to give everyone plenty of opportunities to communicate and collaborate.

Also, the customer service of offshore vendors should be flawless, and human resources should be able to collaborate when needed. 

6. Lack of Transparency and Control

When companies outsource work to offshore providers, they often encounter problems with communication, quality, and timely delivery. These problems can be a result of the offshore partner working differently and may not be able to respond quickly to requests from the customer. In addition, the customer may not have direct access to the workers who are doing the job and may not be able to see what they are doing. This can lead to misunderstandings about what is being done and how it should be done.

To combat this challenge, businesses need to be clear about what they expect from their offshore outsourcing provider. They should also ensure that the offshore provider has a good understanding of their business and the specific needs of the project. And finally, they should establish regular communication channels so that any issues or concerns can be addressed quickly.

7. Lack of Skills and Expertise

When companies outsource business operations to a development partner, they often encounter problems with the quality of offshore vendors. Sometimes offshore workers in other countries do not have the skills or expertise to do the job properly, which can lead to poor-quality work.

Companies that outsource work should make sure that they are choosing a partner company with skilled workers who have good communication skills. One way to overcome this challenge is to partner with an offshore company that has a team of skilled professionals who can help you get the job done right. Partnering with an offshore company allows you to tap into their pool of talent and skills, which can be a real asset for companies looking for offshore outsourcing.

8. Geographical Distances

Geographical distances can be a challenge for offshore teams, but many companies have found ways to overcome it. Some of the hurdles associated with geographical distance include also logistical difficulties.

However, these challenges can be overcome by using technology to facilitate communication (such as video conferencing), by hiring culturally sensitive employees, and by implementing efficient logistics systems. It can be an advantage because companies can save on labor costs by locating their operations in countries with lower labor costs.

9. Project Management

Project management can be a challenge but it can be easily overcome. The most important factor is to establish a good communication channel in place so that any offshore operation problems or issues can be addressed quickly. Another important factor is to have a good project manager who understands the nuances of offshore outsourcing and who can handle any potential problems that may arise with offshore vendors. With the right planning, communication, and project management tools, working with a third-party company can be seamless.

10. Data Privacy

Data protection is hard to execute when you are sharing data with a company located in another country. Most offshoring companies have data security standards which they use to ensure that their client’s information stays confidential. You must review these processes and ensure that your company’s information and operation secrets remain protected.

How to Pick the Best Offshore Outsourcing Partner for IT Services?

Here are the factors to consider when picking the best software development company for IT services.

1. Reputation and Experience

Make sure the company you’re considering has a good reputation and a track record of success in providing IT services. Also, ask for references from past clients to get a better idea of the company’s strengths and weaknesses.

2. Capabilities and Expertise

The company should have proven expertise as a service provider. Choose software development partners that have experience in offshore outsourcing and a team of skilled developers. They should be familiar with offshore operations in your industry and market. Hiring a service provider with the right capabilities, core competencies, skilled resources, business functions, quality control, and expertise in delivering software development services, is critical for offshore outsourcing work to be successful. 

3. Size and Scale

The company should be large enough to provide the necessary resources, but not so large that communication, coordination, and operational efficiency become difficult. Just as important, the company should be able to have a global reach so that they can provide services wherever they need them. 

4. Cultural Compatibility

Your offshore outsourcing partner must have similar values and cultural norms as your own organization, to minimize potential culture clashes down the road and maximize the potential benefits of production offshoring. Being two peas in a pod culturally is not a prerequisite, but it’s helpful for IT business process outsourcing.

When considering IT services outsourcing also remember that the offshore outsourcing market is rapidly evolving and new offshore vendors are emerging all the time. Don’t cross some amazing software development offshore outsourcing providers off your list for minor things – do your due diligence and carefully compare all of your offshore outsourcing operations’ options before making a decision.

5. Cost Competitiveness

The company should be able to offer competitive rates without sacrificing quality or service. Of course, it doesn’t have to mean going for the cheapest option, but it should significantly reduce business costs. 

When considering offshore outsourcing, it’s important to weigh the pros and cons carefully to make sure it’s the right decision for your operational costs. By taking into account the challenges and potential risks involved, you can ensure that your relationship with offshore vendors, even from an overseas location, is a success.

6. Ability to Meet Your Project Deadlines and Budget Requirements

The offshore outsourcing company should be able to meet your project deadlines and budget requirements. This includes ensuring that the team you’re working with has the necessary skills and resources to get the job done right – on time and budget. Verifying this upfront is critical to avoid any nasty surprises with an offshore team down the road.

When considering these factors, it’s important to remember that not all offshore companies are created equal. Do your research and take the time to find the right development teams for your business.

Conclusion – Despite All the Challenges, Offshore Outsourcing Is the Way to Go!

Offshore outsourcing can be a great way to go, but only when well-planned. There are many factors to consider when considering the offshore outsourcing process, such as the specific needs of your business and the availability of a good offshore contractor in your network.

However, offshore outsourcing can offer some significant advantages over domestic outsourcing, including cost savings, access to expertise, specialized staff, and improved quality due to cultural alignment. You can easily build a competitive advantage using independent contractors and remote staff from another country.

Ultimately, the best decision for your business will depend on several factors specific to your situation.