Software outsourcing is reaching new levels of engagement from all sectors. It can be difficult to sort through all the differences when making an outsource vs offshore decision for your business. We'll break down the specifics and help you keep an eye out for the most relevant partner for your needs with some keys tips for choosing an outsourcing partner, no matter your industry.
Technically, whenever you contract an outside company to do something for you, you're outsourcing, regardless of where the service provider is located.
There are three types of outsourcing:
- Onshore is where the outsource company is located in the same country as your business, or 'onshore'.
- Nearshore is where the outsource service provider is located in a country near your own, or 'nearshore'. An example of this would be a US company outsourcing IT services to a company in Brazil.
- Offshore is where and outsource company is located far away, or 'offshore'. For example, a Canadian company outsources business processing to a company in Malaysia.
Recent years have seen a growth in the popularity of nearshoring and even onshoring as businesses shift their focus to more complex services, shared time zones, and fewer language barriers.
Tips for Choosing the Right Partner
Finding the best outsourced services provider can be a major challenge. In this guide, we share the key things to look for in an outsourced service provider. Let's dig right in!
1. Flexible contracts: When giving a consideration to your outsource needs, find a service provider that will give you the flexibility you need in the contract terms. Flexible terms must include scalable staffing and services so you only pay for what you need.
2. Proven reputation: Check the service provider's references and talk with previous clients. Find out what former clients liked about the outsource provider and any troubles they might have had. Take the time to speak with at least 3-5 former clients to get a clear sense of the outsource company.
3. Infrastructure: When considering a provider, ask detailed questions about their infrastructure, such as capacity, secure backups of company data, disaster recovery, and if they have any downtime during routine maintenance. If a service provider fails to give you clear answers on how they process and store your data, don't use them; go somewhere else.
4. Communication: If the outsource provider is located in a foreign country, ask about English language proficiency. If the primary language at your company is English, make sure that the outsource staff are fluent in English. Also ask about frequency of communications: Will it be in real time through Slack? Daily email reports? Weekly briefs? Ask how questions and customer service issues will be handled, too. Do they have a team of customer service agents, or will you need to speak with a specific person based on the services you're receiving?
5. Data protection and IP security: Outsourced service providers in other countries must know American data protection and security laws, including those that apply to specific industries, such as finance and healthcare. They must meet regulatory requirements and be able to fulfill e-discovery requests in a reasonable amount of time.