IT outsourcing and offshoring – what do they involve?

28 08

IT outsourcing and offshoring – what do they involve?

logo-kwadrat-2 Author: Aleksandra Mejer

Aleksandra Mejer – Recruitment Team Lead, 4 years of experience in the IT industry. Currently focuses on building her team and actively recruiting candidates from various areas of expertise. In her daily work she makes it a priority to match projects to candidates’ expectations while ensuring a professional and friendly recruitment process.

Running IT projects requires planning, organising, staffing and leading a team, controlling tasks, etc. Managing a wide range of activities becomes difficult over time, and sourcing and recruiting experienced professionals is a costly and a time-consuming process. This is why more and more companies are opting for outsourcing or offshoring of IT engineers. What exactly is involved in using these collaboration models? Allow me to explain in the article below.


Outsourcing of IT professionals – comprehensive solutions by external companies

According to the calculations by the Polish Economic Institute, 147,000 IT professionals are currently needed in Poland for their share of the total workforce to be the same as in the European Union. Moreover, up to 20 per cent of companies are often forced to refuse a project because they do not have enough staff. This just goes to show how much demand there is for qualified workers in IT services. 

Rather than abandoning projects or spending time searching for the right professionals to carry them out, businesses should consider outsourcing recruitment to an external company. Preferably the one that specialises in finding and hiring IT engineers. Since 2016, one of the market leaders in this sector in Poland is ITDS. The company focuses on supporting clients in IT project delivery, product development and software integration through by outsourcing IT engineers.

Is this a popular cooperation model? According to statistics, the number of companies that rely on outsourcing is increasing by 20-30 per cent each year. The level of expenditure on such services is estimated at USD 50-100 billion per year, with the largest amount spent in the USA.

Companies offering outsourcing of IT professionals take on the responsibility for finding and recruiting individuals with the required competences and relevant experience to work on their clients’ projects.  This allows their clients to focus on other tasks within their organisations. With the outsourcing of IT specialists, they no longer need to carry out in-house recruitment processes, and need much less time to find the necessary professionals or even build a new project team from scratch. As well as saving time and reducing costs, outsourcing makes it possible to benefit from the know-how of the best experts in the industry. This is why this solution is becoming increasingly popular.

Why choose to outsource IT professionals?

Outsourcing IT services has many advantages for companies and businesses. Here are some reasons for considering this option:

  • Relevant expertise – outsourcing allows you to benefit from highly qualified IT professionals with unique skills and experience;
  • Competitive costs – by opting for outsourcing, you can save on the costs associated with acquiring and maintaining an in-house IT team;
  • Scalability – this solution makes it easy to adapt the size of the IT team to changing project and business needs;
  • Focus on key tasks – outsourcing IT tasks to experts enables a company to focus on its operations and key growth areas;
  • Access to new technologies – outsourcing offers access to advanced technologies and solutions that are not always available in-house;
  • Reduced risk – outsourcing the management of a given project to an external provider means that the responsibility for coordinating and monitoring progress, as well as deciding on project strategy and safeguards is delegated to experienced professionals. 

The final choice of the specific scope of activities depends on the client’s needs and objectives.

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IT offshoring – sourcing professionals from abroad

IT offshoring is a practice using two approaches. One approach involves a business client opening a corporate branch abroad and relocating some or all IT-related tasks to other countries. These are usually geographically and culturally distant locations. The reason for this is usually a drive for cost savings and greater financial benefits. This approach is known as captive offshoring.

On the other hand, offshoring may involve foreign companies using the services of IT professionals based in other countries. Poland is a popular location – according to a report by Emerging Europe, our domestic IT sector is the third most competitive among 23 Central and Eastern European countries (after Estonia and Lithuania).

Companies opting for IT offshoring face a variety of challenges, such as the lack of available or suitably qualified professionals in their local market or budget cuts that force them to look for qualified professionals who can deliver services at more competitive rates.

Polish IT professionals are known for their experience and high level of qualifications, as well as their very good English language skills. IT offshoring enables them to work and develop their expertise on the international market, as well as gain experience and take on interesting projects.

How foreign companies use the services of Polish IT professionals

Offshoring of Polish IT experts by multinational companies may involve:

  • Assigning an IT project to a professional abroad: from application development to testing and implementation;
  • Locating a technical support centre and customer service engineers in a selected location in Poland;
  • Transferring the company’s IT infrastructure, such as servers, databases, computer networks, etc., and having them maintained by Polish engineers;
  • Outsourcing software testing to a Polish IT service provider;
  • Having websites developed and designed by Polish professionals.

The whole focus of offshoring is on reaping the benefits of being located outside the home country and capitalising on the opportunities this presents.

Outsourcing and offshoring of IT engineers – what is the difference?

Outsourcing of IT professionals is a model whereby a company hires an external service provider to perform certain activities or functions, allowing the company to focus on its core business and to work with the best and most experienced IT engineers. 

Offshoring of IT professionals involves the use of the services of local engineers by foreign companies. The reasons behind offshoring strategies are confirmed by reports comparing the characteristics of the respective countries’ markets. IT product development in Poland is typically 30% cheaper than in the USA, and labour costs are on average 20-25% lower than in Western Europe and the UK. The exact differences in rates depend on the skills and level of experience of the IT professionals and the type of contract, but a general overview indicates potential savings in the case of offshoring to Poland. Also, if we take into account the recent stalling of wage growth, outsourcing and offshoring in Poland has become more predictable in terms of costs. 

Poland is in the top three most competitive markets for the IT industry in Central and Eastern Europe. With more than half a million highly skilled employees, this dynamic sector accounts for nearly EUR 10 billion in exports, representing 1.7 per cent of the country’s GDP. Poland is the second most attractive country in the world for IT outsourcing – just after India and alongside the Philippines, with Egypt and Malaysia jointly ranked third. According to a report by the Polish Agency for Enterprise Development (PARP), the domestic IT/ITC sector and service exports are growing steadily, while the availability of startup and venture capital funding is expanding. And this translates into growing revenues.

IT offshoring and outsourcing strategies can only be successful when using a professional outsourcing company capable of finding exactly the right candidates, allowing clients to focus their efforts on their core business.