To Offshore Or Not To Offshore? That Is The Post-Pandemic Question

The year 2020 has passed but companies continue to face an infinite number of challenges. Some of them strive to survive, while others keep flourishing. What’s the trick and how do you minimize the risks of these extraordinary times?

Since the beginning of the pandemic, businesses are in need of remote and effective solutions now more than ever before. People say that with the offshoring model, both small start-ups and big corporations manage to maintain a steady cash flow without the loss of product quality. Let's take a closer look at the existing trends and forecasts to see whether an offshoring industry is indeed immune to the crisis.

With the introduction of the worldwide quarantine, global economies shrank rapidly. Business transformations that were supposed to take years happened overnight. McKinsey Global Survey of executives reports that some trends in doing business were probably transformed forever. The pandemic forced the rapid embrace of digital technologies for customer and onboard interaction. In fact, the adoption of new channels of communication is years ahead of where they were when previous research was conducted. Among other massive shifts that are going to become a “new norm” is the increase in remote working, the usage of cloud technologies, and spending on data security.

The labor market across different sectors and geographies was severely affected as well. Only in the United States, 20.5 million people became
unemployed by April. Our lifestyles changed dramatically due to social distancing measures and travel restrictions. It's not a surprise that the tourism and leisure service industries suffer the most. Nevertheless, don’t assume that the software development industry is fully resistant to the challenges introduced by COVID-19.

On the other hand, there are some positive trends. Statista reports that spending on IT services is expected to increase by 4.1% in 2021. Corporations such as Zoom, Team Viewer, Microsoft, and Apple have eased difficulties induced by the pandemic and thus have made a killing on the market. However, it wasn’t the same for the proponents of traditional team models and opponents of remote work. These groups were the first to feel the turbulence of the new reality.

In the updated business environment, offshoring is more relevant than ever before. It stands for delivering some of your company’s operations to specialists abroad. According to reported data, the market size of the BPO industry in the United States has increased 1.6% per year on average between 2016 and 2021. The present patterns are going to continue and this year the industry is expected to increase by 1.9%. Currently, it is estimated to be worth around $135.5B by revenue.

Despite the numerous limits and restrictions 2020 brought, it opened a bunch of opportunities for the fields of online education, internet security, and communications. IT businesses ought to review their strategies in accordance with the new emerging demands. A few years earlier, offshoring as a popular business practice was aimed mostly at reducing costs and lowering salaries by transferring some functions to countries with cheaper economies. In the unprecedented times of sudden changes in workforce and product volume, this move acquires new meaning.

Offshoring practices helped companies to keep the natural workflow of distributed teams and avoid massive layoffs due to well-known financial benefits. In addition, diffused offshoring locations, resources, and team members served as risk mitigation in times of crisis. That’s because geographic dispersion is considered to be a successful risk management plan, which works in case of epidemics, natural disasters, and probable apocalypse. The year 2020 taught us to be prepared for any kind of force majeures, remember?

Today, remote work is not only a means of social distancing but also a productive way of doing business. Because of trustful partners abroad, who are familiar with the WFH concept, as well as developed software infrastructure, companies managed to stay marvelously productive. Management of remote processes or establishment of effective means of communication was not a big deal, thanks to the peculiarities of an offshoring business model. All in all, the expertise of providing high-quality services in remote mode played a key role in business survival and growth.

It would be unfair to highlight only the victories and neglect the failures. In some cases, things are not going that smoothly. Since the beginning of the lockdown in March, India as a popular offshoring hub has faced tremendous challenges. Loads of service providers were not prepared for the work-from-home scenario due to the lack of resources. As a result western clients, who previously enjoyed notable low-cost solutions, were forced to choose another offshoring destination. They may soon turn towards the countries of Eastern Europe, such as Ukraine, Romania, and Poland which are prominent for qualified staff and well-established IT infrastructure.

The future is still uncertain and predictions are rather vague. However, the previous year has taught us to be more flexible and responsive. Thus, it's time to be prepared for unexpected and implement innovative approaches to doing business.

The Coronavirus crisis doesn't scare an offshoring industry because it continues to provide fast and cost-efficient solutions in comparison to in-house operations. It is the turning point to realize the importance of strategic partnerships. As long as you are ready to take a step to digital acceleration and take care of cybersecurity, offshoring can bring your business to the next level. This way you can enjoy the usual perks of the model and collaborate with a trustful service provider to adjust your corporate setup to the new normal.