Why Outsourcing Is Critical for the Tech Industry

The Future of Outsourcing: Why Offshore Development Is Critical to the Tech Industry

The U.S. talent gap continues to expand. September’s unemployment rate dropped to 3.5%, last seen in December 1969. It is good for U.S. workers, but for employers trying to grow their businesses, it makes expanding the team difficult.  

The global organizational consulting firm, Korn Ferry, predicts that challenge is even more difficult for technology companies. They expect the technology, media, and telecommunications (TMT) industries to be short more than 1.1 million skilled workers in 2020, with the gap growing to nearly 4.3 million by 2030

For U.S. specific technology companies, a collision of factors are exacerbating the talent shortage. The U.S. median wage is nearly 2x the national blended level for technology occupations, unemployment is now at a 50 year low, and there is a shortage of skilled software engineers. It is a trifecta that combines to be a headache for companies trying to deliver new technology fast.

Global Engineering Talent

What’s the answer? If you can’t quickly and reasonably build a local team to handle new product development, how do you innovate? The question is top of mind for many successful organizations. The answer might surprise you. 

You can’t innovate without software engineers, but the engineers don’t necessarily need to be physically located in your building or even be your employees. Companies have discovered that while there is a global shortage of skilled technology talent, it isn’t evenly distributed. There are pockets of technological horsepower around the world that have not been harnessed by major corporate conglomerates. In these regions, there is typically a local university that is connected to the local economy and creating new eager graduates annually. If they are successful in finding employment after graduation, often these individuals build their lives in the region. The result is centers of excellence where new graduates blend with senior engineers to create a vibrant environment for innovation. 

Offshore Development Partnerships

For organizations that need engineering talent, offshore developers can mean the difference between achieving a deadline and missing a critical window. The key is to find an outsourced development partner that understands your business requirements, and the market the talent is physically located. For example, an individual might be an incredible developer, but if they have never used real-time payment services on their mobile phone, they might not be the right person to work on a mobile payment application.

In addition to having relevant experience, you also want to be sure that the engineering team you are working with fits with your organization. While these outsourced developers aren’t technically employees, you will be working closely with them. It is important that as you talk to industry peers, you get positive feedback. You can learn a lot about working with an outsourced developer by talking to their other customers.

Some offshore developers will do exactly what is requested – no more or less. If experience tells them something should be considered or done differently, you won’t learn about it until after there is a problem. Other developers have precise ways of completing work that are inflexible. In both of these scenarios, the partnership between your organization and the developer is lost. It is more a legacy “black box” scenario. You ask for something to be done, and the developer does it as defined without engagement. Sometimes that software development model is fine and other times, you want feedback from your team of offshore developers.

In an ideal scenario, your developers are working as part of your company to help you create the best possible software product. If their experience gives them insight, you want to know. Additionally, if your company has a specific software development methodology that works, you want your offshore team to follow that approach. The key is a balanced partnership.

Partnering for Success

The labor market in the United States shows no signs of easing. And the digitization of our global economy means that there is no shortage in opportunity for companies innovating with technology. To balance these factors, companies will need to continue harnessing talent worldwide. Businesses that partner with offshore software developers will be able to quickly pivot to changing market dynamics or effectively launch new products. The success of these offshore initiatives depends on finding the right firm that understands your business and is aligned to make your project successful. 

Want to learn more about how offshoring development can help your business? Let’s connect.