IT Outsourcing and Offshoring – What Are the Differences? Get to Know the Examples

IT project management requires planning, organizing, staffing and directing the team, controlling tasks, etc. Managing a wide range of activities becomes difficult over time, and acquiring and recruiting experienced specialists is expensive and time-consuming. That is why more and more companies decide to outsource or offshoring IT engineers. What exactly does using these cooperation models involve? I will explain it in the following article.

Outsourcing of IT specialists – comprehensive solutions from external companies

According to calculations by the Polish Economic Institute, Poland lacks 147,000 IT specialists to match the share of all employees in the European Union. What’s more, even 20% of companies often have to refuse to implement a project because they do not have enough specialists . This only shows how big the demand for qualified employees is in the field of IT services. 

Instead of abandoning projects or spending time searching for the right specialists to carry them out, it is worth entrusting the recruitment to an external outsourcing company. Preferably one that specializes in finding and hiring IT engineers. In Poland, one of the market leaders in this industry since 2016 has been ITDS. The company focuses on supporting clients in delivering IT projects, product development and software integration through outsourcing IT engineers.

Is this model of cooperation popular? According to statistics, the number of companies using outsourcing is increasing by 20-30 percent annually. It is estimated that the outlay for such services is 50-100 billion dollars per year, with the largest amount spent in the USA .

Companies offering outsourcing of IT specialists take responsibility for finding and acquiring people to work on clients’ projects with the required competences and appropriate experience. Thanks to this, clients can focus on other tasks within their companies. Thanks to outsourcing IT specialists, they do not have to conduct internal recruitment, they can find the necessary specialists much faster, and even build a new project team from scratch. Outsourcing guarantees time savings and cost reductions and allows you to use the knowledge of the best specialists in the industry. Hence the growing popularity of this solution.

Why is it worth deciding to outsource IT specialists?

Outsourcing IT services brings many benefits to companies and businesses. Here are some reasons why you should consider this option:

• appropriate competences – outsourcing allows you to use highly qualified IT specialists who have unique skills and experience;
• competitive costs – the decision to outsource entails the possibility of saving costs associated with acquiring and maintaining an internal IT team;
• scalability – thanks to this solution, you can easily adjust the size of the IT team to changing project and business needs;
• focus on key tasks – outsourcing IT tasks to specialists allows the company to focus on its business and key aspects of development;
• access to new technologies – outsourcing also enables the use of advanced technologies and solutions that are not always available internally;
• lower risk – when a company entrusts the management of a given project to an external supplier, it means that the tasks of coordination and monitoring progress, as well as deciding on the project strategy and its security, are transferred to experienced specialists. 

The final selection of a specific scope of activities depends on the client’s needs and goals.

IT offshoring – acquiring specialists from abroad

IT offshoring is a practice that has two scopes of operation. One is when a business client opens a branch of the company abroad and transfers some or all of the tasks related to IT technology to other countries. These are usually geographically and culturally distant places. Usually, the reason for such a decision is to look for savings and achieve greater financial benefits. This is the so-called captive offshoring.

On the other hand, within this model of cooperation, foreign companies decide to use the services of IT specialists from other countries. Poland is a popular destination – according to the report of the Emerging Europe service, our domestic IT sector is the third most competitive among 23 countries of Central and Eastern Europe (after Estonia and Lithuania).

Companies deciding to offshore IT face various challenges, including the lack of available or suitably qualified specialists in the local market or budget cuts that force them to seek qualified specialists who provide services at more competitive rates.

Polish IT specialists are known for their experience and high qualifications, as well as very good knowledge of English. IT offshoring allows them to work and develop their skills on the international market, as well as gain experience and work on interesting projects.

Examples of using the services of Polish IT specialists by foreign companies

Offshoring of Polish IT specialists by international companies may concern:

• entrusting work on an IT project to a specialist abroad: from application development to its testing and implementation;
• locating a technical support and customer service center for engineers in a selected location in Poland;
• transferring your IT infrastructure, such as servers, databases, computer networks, etc., and entrusting their care to Polish engineers;
• ordering software testing from a Polish IT service provider;
• creating and designing websites by specialists from Poland.

The entire offshoring activity is focused on taking advantage of the benefits associated with locating outside the home country in order to take advantage of the opportunities that this solution offers.

Outsourcing and offshoring IT engineers – what is the difference?

Outsourcing IT specialists is a model in which a company hires an external service provider to perform certain activities or functions – which allows companies using it to focus on their core business and the opportunity to cooperate with the best and most experienced IT engineers. 

Offshoring of IT specialists involves the use of local engineers by foreign companies. The reasons for deciding to offshoring are confirmed by reports comparing the characteristics of the markets of the given countries. The implementation of IT products in Poland is typically 30% cheaper compared to the USA , and labor costs are lower on average by 20-25% compared to Western Europe and the UK . The exact differences in rates depend on the skills and experience level of the IT specialists and the type of contract, but the general outline shows the potential savings when making the decision to offshoring, including Poland. Add to this the slowdown in wage growth in recent years, outsourcing and offshoring in Poland has become more predictable in terms of costs. 

Poland is currently among the three most competitive markets for the IT industry in Central and Eastern Europe. This dynamic sector employs over half a million skilled workers, and its share in exports amounts to almost EUR 10 billion, constituting 1.7 percent of the country’s GDP. Poland ranks second in the world in terms of attractiveness for IT outsourcing – right after India and the Philippines. Egypt and Malaysia are in third place ex aequo. As stated in the PARP report, the domestic IT/ITC sector and export of services are constantly growing, while the availability of startup and venture capital financing is expanding. And this translates into growing revenues.

Offshoring and IT outsourcing can only be successful when using the services of a professional outsourcing company that can help you find exactly the candidates you are looking for – while allowing companies to focus on what is most important to them.