Offshoring offers a lot of attractive benefits to a start-up, however, it’s not easy to find the right people especially if you’re recruiting them from the other side of the world. If you’re looking to assemble your own offshore team, read all about the basics of offshoring in this entry!
There are two types of offshore teams. A local company from the U.S. or other countries either establishes a subsidiary in another country to directly set up a team, or the company hires an offshore services provider to hire a team for them.
Although the term “offshore team” can refer to both production and services offshoring, the term now commonly refers to remote teams in services offshoring such as accounting and finance, call centers, marketing and sales, IT services, and software development.
Traits for Choosing a Good Offshore Team
The right offshore team for your company should be chosen based on the team’s characteristics that are beneficial for your business.
You should take into account if your in-house team will be working with the offshore teams and how well these teams can coordinate and work with each other. The attributes of a good offshore team can guide you in choosing the best for your company.
The traits to look for when choosing an offshore team:
The right skills and expertise
The potential team members should have the right skills and expertise for the projects you will give them. Examine their skills and experience to see if they match the requirements you need. Evaluate their problem-solving skills by asking how they evaluate issues and find solutions for those issues. Check to see what kinds of projects they have worked on and the technologies they used.
Efficient communication skills
Look for a team with a high level of English proficiency. It doesn’t mean they have to speak English like Americans; what’s important is that your instructions and project requirements are fully understood and that they will be able to fulfill your tasks based on your communications with them.
Efficient communication between you and the team will help in providing accurate information and proper expression of any problems.
Choose a team that is accountable and responsible for their actions, and cares about the final results of the product. Since you can only monitor your team through digital means, make sure you can rely on them to complete the tasks according to the schedule you agreed.
Look for a team that can manage their different tasks at the same time without sacrificing the quality of the product. Multi-tasking skills will increase a team’s efficiency and productivity.
They must be flexible enough to adjust to sudden changes in project requirements or unexpected issues that may appear over the entire duration of the project.
Choose a team that is trustworthy when it comes to data security and project-related confidential information. They must be willing to sign non-disclosure agreements or service level agreements to protect the privacy of company data and information.
Top Countries to Hire an Offshore Team
The country where the offshore team is located is another important factor to consider when choosing the right team. Working with offshore teams from other countries can have its advantages and disadvantages.
But these pros and cons can help you in choosing the country for your remote team. The top countries to hire offshore teams:
- A 2018 EF English Proficiency Index (EPI) score of 61.84, rank #14 among 88 countries and rank #2 among 21 countries in Asia.
- A software engineer in the Philippines has an average salary of PHP 420,476 ($7,973.19) per year compared to an American software engineer who has an average salary of $83,437 per year.
- It’s estimated that more than 4 million trained workers have experienced working for foreign companies (including offshoring industries) which means they have gained relevant knowledge and skills in their respective specialties.
- Generous tax incentives are offered to foreign companies that establish new businesses. A company can get a 100% exemption from corporate income taxes from four to six years. Upon the expiration of the tax holiday period, the company will only get a 5% special tax rate on gross income and is exempted from paying all national and local taxes.
- Metro Manila and other major cities such as Cebu, Bacolod, Iloilo, Dumaguete, and Davao have economic zones and business parks with the necessary infrastructure and facilities for offshore business processes.
- An average of 20 typhoons visits the country every year that causes destructive floods and cancellation of school and work in the cities where offshoring centers are located. There is a total of 19 regular and special non-working holidays in a year; employees who work on those days receive higher pay than normal working days. Offshore investors should make adjustments with their work schedules and salary budgets to take into account these two issues.
- Software developers have a high level of technical skills due to the government’s support for IT educational programs. This is proven by the high results achieved by Belarusian contestants in international IT competitions.
- The country is rank #26 among 188 countries in the UN’s 2015 World Education Index, and an estimated 83% of the youth aged 18 to 24 receives higher education. Belarusian universities produce about 4,000 IT graduates annually.
- Many business analysts, managers and software developers of IT companies adequately speak English enabling fluent discussion of the features and issues of projects with their American counterparts.
- A software engineer in Belarus has an average salary of $32,400 per year while a software engineer in the U.S. has an average salary of $83,437 per year.
- Compromise in the security and confidentiality of sensitive information of some companies offshoring to Belarus have been reported in recent years. In software offshoring, there have been issues about loss of flexibility in adjusting to changing business conditions, lack of customer focus, and the sharing of cost savings between the client and the offshore services provider. Companies should ensure that when they offshore to Belarus, there is strict protection of project-related information and their financial arrangements with providers are clearly defined.
- A large talent pool of Science, Engineering, and Mathematics (STEM) graduates with 2.6 million STEM graduates in 2016. India’s 380 universities and 11,200 higher education institutions produce about 2.1 million graduates each year.
- A 2018 EF EPI score of 57.13, rank #28 among 88 countries and rank #4 among 21 Asian countries.
- An Indian software developer has an average salary of Rs 407,972 ($5,797.15) per year compared to an American software developer with an average salary of $69,703 per year.
- Lingering issue of skills gap – the mismatch between the skills that workers have and the skills required by employers. A 2016 study by Aspiring Minds, an employment solutions company based in New Delhi, studied engineering students who graduated in 2013. The study showed that about 94% of the engineering students are not fit for software development jobs. However, the government is fully aware of the skills gap issue and is implementing programs in the education and labor systems to solve this issue.
- The largest number of STEM graduates in the world in 2016 with 4.7 million. China will have about 8.2 million college graduates in 2018 with many of them joining the sectors in advanced manufacturing, services industries, and high-tech industries.
- Labor costs for production and services offshoring are cheaper compared to the United States. A Chinese mechanical engineer earns an average salary of CNY 157,957 ($22,982.5) per year while the same position in the U.S. earns an average of $69,100 per year. A Chinese software developer earns an average of CNY 180,000 (29,160.61) per year while an American software developer earns an average of $69,703 per year.
- Language and cultural issues are major challenges. China’s 2018 EF EPI score of 51.94 and ranking of #47 among 88 countries means it has a low English proficiency. An example of a cultural issue is the communications style in business. Many Chinese business executives tend to be quiet and reserved in meetings while Americans are more outspoken and direct. Both parties may need multiple meetings before they can close any agreements. The language issue is being addressed by the government by further strengthening English instruction and subjects in the primary to tertiary levels of education.
- Offshore programming is the fastest-growing segment in the country’s IT sector. Romania controls five percent of the international offshore software development market and is the third leading (after India and China) software exporter in the world.
- Software developers are skilled in languages such as C, C++, Java, .NET and PHP, and in mobile application developments.
- A Romanian developer earns an average pay of $24,960 per year compared to the higher pay of an American software developer.
- A 2018 EF EPI score of 60.31, rank #16 among 88 countries and rank #13 among 32 countries in Europe.
- Quality control issues about products and services have been faced by clients offshoring to Romania and other Eastern European countries. Quality monitoring can be a challenge when an American client can’t frequently monitor an offshore team’s tasks due to the time zone differences between Eastern Europe and the U.S. A client can address this issue by assigning an expatriate project manager (e.g., American manager) in the offshore center for quality monitoring and ensure the standards and procedures of the parent company are strictly followed.
- Bulgaria’s software developers are rank #12 for the best developers, while its Java and Python developers are rank #2 and #3 for best developers with domain expertise in international rankings.
- Software developers are highly skilled in C++ and Java. A Bulgarian software developer earns an average of $20,502 per year compared to an American software developer who earns more than twice that amount.
- A 2018 EF English Proficiency Index (EPI) score of 57.95, rank #25 among 88 countries and rank #21 among 32 countries in Europe.
- The country is considered as the most corrupt member state of the European Union with a high level of perception of corruption. Offshore investors can manage this issue by partnering with trustworthy offshore service providers who can guide them through the complicated bureaucracy of government regulations for setting up new businesses.
- Every year, about 80,000 students major in IT and IT related fields, and about 15,000 IT specialists graduate each year from 18 Polish technology colleges. According to infoShare – a yearly tech conference in Central and Eastern Europe, Poland has almost 250,000 software engineers.
- A rich talent pool of offshore programmers in Java, Python, and Ruby.
- A software developer in Poland has an average salary of $23,756 per year compared to an American software developer who earns more than twice that amount.
- A 2018 EF English Proficiency Index (EPI) score of 62.45, rank #13 among 88 countries and rank #11 among 32 countries in Europe.
- Several software development companies offshoring to Poland have had negative experiences with some Polish developers. These companies have complained about late submission of projects, the developers being out of reach when you need to talk to them, and the high rates they charged compared to other offshore development countries. A client can avoid these issues by avoiding freelance developers and hiring a reliable offshore services company to provide them with a dependable offshore team.
- Ukraine’s 830 higher education institutions produce an estimated 560,000 graduates every year with about 20,000 IT engineering graduates.
- A Ukrainian software developer earns an average of $24,824 per year while an American software developer earns an average of $69,703 per year.
- A 2018 EF EPI score of 52.86 (moderate proficiency), rank #43 among 88 countries and rank #28 among 32 countries in Europe.
- The ongoing conflict in eastern and southern Ukraine between pro-Russian separatists and the Ukrainian military has caused political instability to the government. Massive corruption is also a lingering problem. These two issues have affected foreign investors’ confidence in the economy. However, many offshore clients are told by Ukrainian officials to set up their business in Kiev and other cities that are far away from the conflict.
9. Czech Republic
- Czech developers placed ninth with a score index of 90.7 in HackerRank’s 2016 listing of the best developers among 50 countries.
- The university system focuses on engineering and science which results in a labor force that is highly skilled in IT technologies and software development.
- A developer in the Czech Republic has an average pay of $23,445 per year compared to the much higher salary of an American software developer.
- A 2018 EF English Proficiency Index (EPI) score of 59.99, rank #20 among 88 countries and rank #17 among 32 countries in Europe.
- The Czech Republic faces issues similar to other Eastern European countries such as hidden costs in the business partnerships between clients and offshore services providers, and the confidentiality of client information. Clients are advised to be aware of the hidden costs that are not specifically written in their contracts with the providers. Clients should ensure that providers will sign non-disclosure agreements to protect confidential information.
Hiring an Offshore Team from Full Scale
If you offshore to Cebu City, Philippines, Full Scale can hire the right offshore team for you. We test the skills and expertise of applicants and verify their qualifications to ensure you only get the best. Working with offshore teams will be more manageable if you hire your teams from Full Scale.
We offer affordable access to an experienced and highly-skilled offshore team of developers, designers, testers, and digital marketing personnel. We have years of successful partnerships with established companies like GigaBook and Stackify by helping them establish their offshoring operations in Cebu City. Contact us to learn more about our offshoring services.