How does offshoring IT functions impact tech workers and the labor market? Find out the pros and cons.
Key takeaways:
- Technology offshoring is the practice of relocating IT services to offshore locations.
- Companies benefit through cost savings, greater efficiency, and economic benefits.
- A pro for IT employees is gaining the chance to take on higher-level roles at their companies, and a con is facing language and culture barriers offshoring may bring.
Technology offshoring is being incorporated by a range of U.S. organizations today. This practice, which is the relocation of tech services to lower-cost overseas destinations, has sparked debates within the industry, primarily related to the loss of local IT jobs.
Business process outsourcing (BPO) can create many benefits for both individuals and companies, however. This post examines the impact of technology offshoring on IT careers, exploring the opportunities it presents for companies and IT professionals.
What is technology offshoring?
Technology offshoring is a strategic business practice where companies relocate certain IT functions to offshore locations, typically to countries that have lower labor and operational costs. This allows organizations to take advantage of a global workforce, tapping into a diverse pool of skilled professionals while minimizing expenses.
A primary benefit is cost savings. Offshoring can provide access to highly educated and capable employees at a fraction of the cost of hiring locally. This reduction in labor expenses can significantly improve a company’s bottom line, freeing up resources.
Technology offshoring can also lead to increased productivity and efficiency. Companies can take advantage of time zone differences to ensure that work is being done around the clock. Offshoring also enables firms to outsource non-core IT functions to specialized offshore teams.
The practice creates benefits on a broader scale, too. It fosters economic growth in offshore destinations, creating employment opportunities and driving economic development. It also encourages cross-border collaborations, which can contribute to ongoing technological advancements and innovation.
How tech offshoring impacts IT careers
This kind of outsourcing can have several different effects on IT in general and careers and professionals in this arena. Here are some of the key ways these jobs are impacted:
- More local positions related to offshore management
Tech offshoring can create additional opportunities for IT professionals by increasing demand for specialized skills in managing and coordinating offshore teams. - More jobs in offshore markets
Another big factor is the creation of jobs in the country where work is being outsourced. This can stimulate those economies, which makes a global impact. - Fewer entry-level jobs in local markets
With IT outsourcing, regular full-time positions in local regions can diminish in some cases. - A focus on skill upgrading
Because many IT functions can now be outsourced, local career seekers may start shifting their focus to core technology business functions to ensure their skill set stays in demand.
The IT job market may continue to shift as more companies pursue offshoring. But IT offshoring does impact what positions are available at home and what kinds of tasks local employees are taking on.
Pros and cons of technology offshoring for IT professionals
IT workers already face a competitive job market. What happens when more companies decide to offshore positions? There are both pros and cons to IT offshoring:
Pros of IT offshoring
- Employees are exposed to diverse cultures and work environments they wouldn’t normally have access to.
- There are new opportunities for career advancement when lower-level jobs are being outsourced and the company is saving money via offshoring.
- Local IT professionals can take on additional skills and experiences that help them move up in their careers.
- An offshore team of experts can take on tasks to free up employees’ time – —for example, they can handle security monitoring and notifications, or a virtual assistant can handle scheduling from afar.
Cons of IT offshoring
- Sometimes local teams face challenges when communicating and working with remote teams, like language or timing barriers.
- Companies must be mindful of the jobs being transferred overseas and account for new upper-level positions for local IT professionals.
- Hiring offshore teams can sometimes mean less control over IT tasks and functions.
- Internal teams may have trouble maintaining high morale when offshore teams are first hired.
While there are disadvantages of offshoring for IT professionals, the practice opens up numerous opportunities – cost savings and greater efficiency, for example – for businesses. This, in turn, can positively impact local IT workers as they navigate their careers.
How to make the most of offshoring
There are ways to deal with the cons when you’re considering IT offshoring to ensure you’re supporting your IT employees and combining the teams efficiently:
- Emphasize that both teams need to learn to embrace new cultures and work habits.
- Educate each team about the other country’s values and beliefs.
- Encourage open communication whenever an issue arises so everyone can learn from it.
Starting to offshore means it’s a good time to leverage opportunities for professional growth and development. Help your IT employees define new skill sets they need to succeed, and help them accomplish their career goals. Prioritize development opportunities in the tech field, including attending conferences, taking courses, or learning about innovations that could benefit the business.
What does the future of technology offshoring look like?
There’s no doubt that the pandemic increased U.S. businesses’ dependence on remote workers, and that includes offshoring teams. Organizations can see major benefits like lower labor costs, greater efficiencies, and access to a new pool of expert talent. Leaders just need to be sure they’re supporting internal teams throughout this shift and helping them understand how they can move forward in their IT careers.
It may be time for your business to outsource IT functions overseas. At DOXA, we help you create an exceptional offshore team for your technology needs, ensuring you maintain control and efficient business processes. Save up to 70% on hiring costs and set your business up to scale effectively.
Contact DOXA today to learn more about accessing Borderless Talent.™
