What is offshoring?

There were many misconceptions in the background. Offshoring basically means moving a company’s operations outside Finland’s borders. In IT-related work this has particularly meant having programming done outside of Finland in countries with inexpensive production such as India.

There is a lot of insecurity and tons of questions linked to offshoring – how can I be sure that someone somewhere is doing the duties I have given them and even if they have the proficiency to do them?

What is the difference between offshoring and nearshoring?

Simply distance. Offshoring mostly refers to companies operating in India, China or other Asian countries. Nearshoring is a bit of a younger phenomenon to which the regions of the former Soviet Union and countries of the Eastern Bloc such as Romania and
Bulgaria belong.

For instance, in manufacturing, shifting the production over to countries where it is cheap has been very common in the past 10 to 20 years. In knowledge work this operating model has become more popular especially in the last 10 years.

Offshoring in programming and web development

Offshoring has become considerably more common in web development. There are many reasons behind this, of which the most essential ones are:

Demand for professionals has increased

The world is becoming more and more digitalized and this can be seen in the increasing demand for technology specialists. There aren’t enough specialists to meet the demand, which means many companies start looking for opportunities outside of Finland.

The development in communications technology has reduced emotional distances

Even though our offices in Helsinki and Davao City in the Philippines have a distance of almost 10 000 kilometers, we are just as present on projects through the Internet and
communication just works. Development in technology has made teamwork easier than before.

Know-how is also beneficial abroad

Finnish technology skills are often praised – and for a good reason too. But it is a skill mastered in many countries. For example, many universities in Davao City teach IT science and programming.

The cost is moderate

Web development carried out as offshoring is significantly cheaper than the general level of prices in Finland. Even though the wage for senior coders has risen in offshoring, the price level is still extremely tempting.

Three misconceptions about offshoring

No matter what the job or project is, we have a lot of prejudice and misbeliefs against outsourcing and production through offshoring.

1. “Someone is going to take my money and nothing will happen”

One of the most common worries in for instance offshored software development is uncertainty. Is the supplier competent enough and can the company be trusted? In a way this is a

justifiable worry and situations where this presents a problem will certainly come up.
Because of this it is smart to get to know the people and the practices on both sides. Make a test case first, make sure you give the supplier a proper briefing, and make sure to plan together how the progress of the project is tracked.

2. “Because we aren’t in the same location, finishing the project is going to take much longer”

In web development projects offshoring is often considered an issue because the team working on the project isn’t physically sitting in the same office let alone the same country. In certain projects this might be an issue but mostly it is a matter of

As far as we can see projects might even proceed smoother and more efficiently when excessive meetings are minimized and everyone involved in the project has a clear understanding of what we are doing and how the project is going.

3. “Executing the project will become more difficult when communication happens in different languages”

If the main language in the company is English, everything should be pretty clear. On the other hand, if the main language of the project is Finnish and your offshoring associate only speaks English, there will naturally be some additional hustle in the communication and project management.

We at Coders for Hire have solved this dilemma simply by having a Finnish liaison in the Philippines’ office, who works as head of the project department for our clients.

How to succeed at offshoring?

Here are the crucial points that should be in check in order to

  • Shared goals

  • Mutual trust

  • A clear operating model

  • Project communication (Trello, Slack, etc.)