Offshoring is NOT the answer to the digital skills crisis in the UK. In his latest article as a Forbes contributor, Sparta Global CEO and Co Founder David Rai talks about the benefit of onshoring to business resilience in the UK and why business must club together to make a social and economic impact with local talent.
Once billed as the perfect way to scale tech teams at pace, offshoring enables companies to shift service centres or routine operations to a location outside of their country and benefit from more cheaply available resources.
While cutting a company’s overall costs is enticing, offshoring has several moving parts and a potential for things to go wrong—often unavoidably. With alternative, cost-effective ways to build and scale teams more widely available, onshoring (or reshoring) can help businesses to collectively rebalance the country's economy, create new jobs and cut our trade deficit—all while making a social impact through the development of local talent.
In the U.K., for instance, there are millions of people out of work and education who want to work. With capability now so close to home, is offshoring a lazy approach to growth?
Cost savings aren’t a guarantee
Cutting costs is often the main motivation for offshoring. When companies operating in a developed country relocate to a developing country, they can take advantage of lax laws, lower tax rates and cheap resources. But there are significant hidden costs.
Managing offshore teams means managing people in different locations, different time zones and with different native languages. This can mean hiring managers specifically to oversee the activity of offshore teams or significant travel expenses to send leadership overseas from other offices.
Consider the customer
Customers today have a good awareness of their data privacy rights and are increasingly aware of why personal data is being collected and used—and by whom. Customer trust in how their data is protected is critical to success—and 76% of CEOs agree it drives business competitiveness too, according to Accenture. Organisations cannot take any data security risks.
Yet when key software services and staff are relocated to offshore locations, the risk of data leaks or breaches increases tenfold. Sensitive data and systems can only truly be secured through strict controls, protocol and oversight. If controls in an underdeveloped country are more lax—the consequences can be catastrophic for customer loyalty.
Equally important is customer satisfaction. Offshoring can leave customers frustrated when there are prolonged delays for a response or issues are lost in translation. Language barriers can impact effective support, and while cultural issues should be considered as a matter of ethical and professional courtesy, they should not become barriers.
What is the personnel price of offshoring?
High employee morale will positively impact your bottom line. It’s important to remember that moving jobs and responsibilities offshore can leave existing staff feeling threatened or resentful—even lonely. This will likely be noticed across your talent retention.
Should it be coming home?
Several factors could influence a company’s decision to set up onshore subsidiaries or partner with local service providers, including specific industries, company goals and market conditions.
What’s important to remember is that onshoring is a strategic move. Successfully onshoring a business requires careful planning, a thorough understanding of the domestic market and effective management of the transition process.
Here is what the process should look like to help you consider this option.
High Performance At Home
Successful onshoring can mean improvements across quality control, regulatory compliance, customer perception, employee responsiveness and reduced lead times for innovative activity.
While the business benefit is clear, the social impact that companies make by reshoring services in your country can be even more of a draw. Onshoring of products and services is becoming one of the corporate responsibility objectives for organisations. By keeping services and employees in the country, organisations are contributing to healthy job creation and building a specialised workforce—with the skills to lead organisations in the future—driving innovation with local professionals and helping to rebalance the economy commercially.
I encourage businesses not to settle for something that looks big and shiny, but to build teams that are undeniably fit for purpose. Invest in local talent and build trust, and they’ll be a motivated, specialised workforce that prioritises quality and compliance. This is how to build a sustainable business.
Careers are not linear, and it’s important to try and find what you like to do – and do it. George Swirsky thought he was set for a career in the aerospace industry, but after studying the subject at university he identified a passion for problem solving. A career in technology promised to test George, he just needed an opportunity. Two years after joining Sparta Global and George is a Platform Engineer in the Department for Education working in an innovative department. We caught up to talk about his journey.
Abhishek worked in hospitality for more than a decade before seeking a career change after the impact of the Covid pandemic. Faced with a desire to start a role in a new sector, but with little support for personal learning and industry-specific training for career changers thin-on-the-ground, Abhishek finally found an opportunity with Sparta Global. Now working in a successful public sector role, Abhishek was named Spartan of the Month from more than 600 active consultants.
For Alex Hewitt, his new career has been a bit of a shock – just four years ago he was living and working in Spain. When Covid pushed Alex into a rethink, he opted to change careers and build a new future in Project Management. Now a full-time employee at a multinational electronics company, we caught up with Alex to find out about his journey so far.