Peculiarities of Outsourcing To Different Countries

Let’s say, you decided to outsource some IT work. What do you do next? Where do you find your outsourcing team, your ideal business partner? Of course, you can always use websites for freelancers and find someone fitting yourself. Or you can hire an outsourcing company that specializes in providing outsourcing services and consulting. Of course, conducting the search yourself will give you a more direct contact with the future business partner, but a company that specializes in outsourcing services will have a bigger pool of proven specialists for you to choose from, than if you decide to hire a team yourself through a website. Moreover, it will make sure you don’t have any communication problems or financial losses when outsourcing IT development.

Outsourcing - Why and Where?

The Deloitte’s Global Outsourcing Survey 2016 shows that first and foremost companies outsource to cut costs. The other top reason is that outsourcing allows focusing on the company’s core business. Number 3 in the ranking is solving capacity issues. While 90% of respondents have operations in North America, 65% in Europe, and 56% in Asia Pacific, 50% in South America, 40% in the Middle East, and 33% in Africa.

Basically, you can outsource anything almost everywhere, but still, there are outsourcing hotspots on different continents. The two top destinations worldwide are India and China, due to their financial attractiveness, people skills, and availability. Among Europe’s outsourcing hubs are Ukraine and the Czech Republic.

According to Gartner, a marketing research firm, India currently remains the undisputed leader in offshore outsourcing. This country is the leading recipient of outsourcing of such IT functions like software development and maintenance. On the one hand, high educational standards and fluency in English make the country very attractive for American companies. On the other though, bad infrastructure, rising costs, low worker retention scares off some of the companies that are looking to outsource.

Some countries like for example China are challenging India’s leadership. Even though it’s a beloved outsourcing destination, some issues may arise, if you choose to work with a Chinese partner. A couple of tips to avoid complications:

*  Ask companies similar to yours for references, find out if the prospect partner has a history of respecting intellectual property. Finally, ask the potential partner for a sample of their work.

*  Do not reveal all of your product specifications! Protect your product from being copied. During the initial negotiations, give only a general idea of your product.

*  Negotiate a penalty for last-minute price increases. Apparently, it is a common practice in China to demand a higher price than settled upon at the very last moment. Or to insist on delivering a different amount of product than discussed.

*  Be tough, haggle hard!

Get patent protection to avoid intellectual property theft.

Eastern Europe is another serious competitor. Ukraine and the Czech Republic are two of the biggest outsourcing destinations in this area. The latter attracts with its highly qualified professionals, political stability, low rates, as well as a great location, which proved to be especially convenient for German businesses. However, one problematic area is the nation’s industrial regulations. And the government is yet to take legislative steps to improve stability and efficiency.

Ukraine’s solid scientific and mathematical background allowed for several generations of great IT talent to emerge. In fact, the Ukrainian IT industry comprises more than 500 outsourcing companies and 100 global R&D centers. It employs over 50,000 engineers! The increase in political risk over the last couple of years has been partly mitigated by the government's implementation of reforms that boosted Ukraine's competitiveness on the outsourcing software development market.

To sum up, we can see that outsourcing to different countries has own peculiarities due to difference in legislature, resources, culture, and time zones. It’s always up to you to decide where to outsource, just don’t forget about the abovementioned rules to make the process safe for your business.