8 Common Challenges and Risks in Offshoring Practices

Offshoring has been growing rapidly, not just in the UK, but around the globe and seems to be a continuous trend. Offshore outsourcing offers many benefits, but it does come with its share of challenges. Getting to know these challenges will help you tackle them better, ensuring you make the most of offshore outsourcing. Keep reading to delve into common offshoring hurdles and discover friendly strategies for overcoming them.


What is OffShoring?


Given terms like ‘offshoring’ and ‘outsourcing,’ it’s common for them to get mixed up and seem confusing. Offshoring is a widely adopted approach where businesses enlist team members from other countries to handle particular tasks. The list of possible offshoring roles is endless, however, some common positions encompass IT support, customer service, web design, and more.


Why Has Offshoring Become So Popular?


The main reason why companies opt to offshore is to tackle high labour and operational costs. Business outsourcing opens doors to skilled workers and essential resources for most types of operations. Outsourcing companies make it easy to hire highly educated offshore staff at a fraction of the cost that would be paid locally.

8 Common Challenges in Offshoring

Although there are a plethora of benefits to offshoring, it is important to be aware of the possible challenges that businesses face in the process so that they can be overcome. Here we have outlined 8 common challenges with offshoring.

1. Risk to Data and Privacy

With the appropriate tools, hackers and malicious actors can readily breach cloud data storage, potentially leaking confidential company information. Furthermore, they may install malicious software on servers, disrupting business operations. Offshoring amplifies this risk as it entails entrusting third-party organisations with product data, business plans, and other internal information.

2. Unforeseen Cost Overruns

A primary advantage of offshore outsourcing is its potential for cost savings, which can be invaluable for businesses operating on a tight budget. Nevertheless, offshore outsourcing may also entail unexpected expenses. For projects that require certain skills or talent, recruiting offshore specialists with specialised skills becomes necessary to tackle the highly sophisticated aspects of your product. This means you may need to extend your budget. 

3. Quality Concerns

Although offshoring grants access to skilled professionals, factors such as cultural disparities and delayed information exchange can compromise the quality of the end product. Moreover, the pursuit of cheaper alternatives is another contributing factor. While nations with lower living expenses may offer cost-effective solutions for offshoring software development, the quality of these solutions may not always meet expectations.

4. Challenges of Cultural Differences

Cultural barriers can cause significant trouble within a global team, often leading to miscommunications and misunderstandings. Even with English as a common language, variations in expressions and vocabulary can result in frequent misinterpretations. Additionally, differences in pronunciation, accents, religious practices, and social norms further influence individual behaviours and collaboration dynamics.

5. Challenges in Communication

Language barriers pose challenges in offshore outsourcing, potentially leading to miscommunications and frustration, which can affect work quality. However, with effort and planning, most language barriers with offshore vendors and foreign workers can be overcome. Using translation software or services and employing interpreters can facilitate communication between workers from different countries, enabling businesses and offshore vendors to overcome language barriers and benefit from offshore outsourcing.

6. Lack of Technical Expertise

When companies opt to offshore, often they have primarily considered the price and can miss factors such as important skills and expertise.  When businesses entrust work to a development partner, they frequently face issues concerning the quality and communication of offshore vendors. Occasionally, offshore workers in different countries lack the requisite skills or expertise to fulfil tasks adequately, resulting in substandard work quality.

7. Legal and Regulatory Considerations

Industries such as finance and healthcare prioritise safeguarding their internal and client data. Therefore, they should engage businesses that adhere to government regulations. Businesses aiming to engage in cross-border trading and expand internationally must ensure compliance with confidentiality rights, liability, data protection, and regulatory requirements.

For instance, Europe’s GDPR safeguards data from being leaked to other countries, making European nations cautious about cross-border trading. Hence, businesses should contract only with companies knowledgeable about and compliant with relevant laws.

8. Managing Time Zone Differences

Time zone variances can present both advantages and challenges for your offshore team. With effective planning, you can establish a schedule ensuring continuous project coverage by team members across different time zones. However, coordinating overlapping schedules for meetings becomes challenging, particularly when the time difference exceeds six hours, making collaboration more difficult.