The Ethics Evolution of Offshoring: A Glow Up Story

Undeniably, the sphere of offshoring has expanded rapidly since the whole gig kicked off in the late 90s. I remember when people used to think it was all about exploiting cheap labor in some far-off country. But fast-forward twenty-odd years, and the smart cookies in software development have a whole different take on it. They’re seeing offshoring as a golden ticket to snagging the best tech talent and scaling up faster than you can say “code”.

But what are the impacts of offshoring? As the concept moves mainstream, I  thought it was high-time for a post that discussed the ethics evolution of offshoring. I’ve researched my brains out to gather data that stokes the debate from all perspectives, including understanding the  trends driving organizations towards offshoring, the benefits it offers, and the ethical factors that demand attention. Let’s start with a look at what offshoring is today.

Understanding Today’s Offshoring: Figures and Trends

Our world’s getting smaller every day, thanks to tech. It’s like we’re all neighbors on this little digital street. This is awesome news if you’re into offshoring because you’ve got access to a global pool of talent. From Eastern Europe to Latin America, there’s a world of tech whizzes just waiting to get on board.

Don’t just take my word for it, check out the stats. In 2023, almost 54% of all companies were using third-party support teams, and we’re not just talking call centers. I mean, the global outsourcing market was worth a whopping $92.5 billion before the pandemic hit, and it’s still growing.

And get this, more than 93% of organizations are either thinking about or have already jumped on the cloud services bandwagon to boost their outsourcing game. Turns out, a third of all these businesses are cool with their operating costs going up if it means they can get on the cloud.

But it’s not all rainbows and unicorns. Data security is a biggie for about 68% of companies looking to shift to cloud tech. And around 45% are a tad worried that cloud-based services might not be all that reliable. Plus, there’s a fear of losing intellectual property, which is a major concern for 35% of these companies.

Despite these concerns, more chief intelligence officers are getting on board with offshoring. In fact, over 44% say they’re more likely to use offshoring suppliers than they were just five years ago. And it’s the tech sector leading the charge, with about 64% of outsourced offshore tech functions being about software application development.

The motivation? Well, for one, offshoring tech functions helps companies focus on their core business – that’s the main reason for 49% of them. And let’s not forget about saving money – 45% of companies do it to cut costs. Plus, about 46% say offshoring gives them access to skills they don’t have in-house.

So yeah, offshoring isn’t just about cheap labor anymore. It’s about finding the best talent, wherever it might be, and bringing it right to your digital doorstep. It’s an exciting time to be in the biz, that’s for sure.

Why do organizations use Offshoring?

Maybe you’ve already decided that Offshoring is the best solution for your product development. (Congrats, you’re right.) You might have even started trying to find those software engineers you haven’t been able to find close to home. (How’s that going for you?) There are pros and cons to Offshoring—here are a couple of the pros to consider:

• Access to experienced talent

If you’ve looked close to home for software developers who have niche talent, availability, and budget-friendly rates, then you know as well as we do that they are few and far between. You’re not alone: This is precisely why Offshoring is gaining momentum.

Access to talent accelerates scaling and allows for building products faster. Our dear clients, iScribeHealth, supercharged their dev team and whipped up a brand new SaaS product that works hand in hand with their main platform thanks to the team we assembled for them. The best part? They got it done a whole year earlier than they would’ve if they’d stuck with just their in-house folks. Now, this beefed-up team is not just chilling. They’re on it, handling the ongoing stuff and upkeep that the original team just wouldn’t have the time to get to. And that is how you do more with more!

• Cost-efficiency

No matter how well-funded your company is, you’ve got a budget to keep. And money doesn’t grow on trees. (If it did, we’d all be happy horticulturists, am I right?) So if you hire all of your software developers in your hometown—be it Los Angeles or London—you’re going to pay a pretty penny. And seeing as local talent is so hard to find (see note above) if you insist on locals, you’re going to have a supply and demand issue in addition to a budget problem. Offshoring saves your budget, your product, and the day.

Can offshoring have negative effects on the country where the hiring is done?

So, let’s chat a bit about the impact of offshoring, and specifically how it relates to hiring software development talent from abroad. One of the main questions you might be grappling with is, “Am I snatching away the best talent from local businesses?” It’s a fair question, but after digging into it, I’ve come to the conclusion that there’s a lot of talent to go around.

Here’s the thing – the global talent pool is vast, especially for software development. In fact, it’s the tech sector that’s been moving towards outsourced suppliers the fastest. A whopping 64% of offshore tech functions are related to software application development. So, by offshoring, it’s not like you are poaching the talent away from a local business.  If a whizz kid from overseas decides to join your team, it’s not like they’re being plucked away from a local gig. They’re choosing to work with you because they see value in it.

And why wouldn’t they? Working with a US company is a real chance for developers to show off their skills and grow. Plus, they get the salary they’re after. The fact that rates are lower abroad works out great for both sides. You get to stay within budget and secure developers with the expertise you need, while they get a paycheck they’re happy with. It’s a triple win!

Now, it’s not all roses. Some folks might argue that about 300,000 jobs get offshored out of the US each year, which could negatively impact local job markets (statistics by Fortunely). And sure, during tough times like the Great Recession, 86% of Americans blamed offshoring for worsening the crisis.

Yet, it’s also important to remember that the world of work is changing. More companies are switching to cloud services, opening up new opportunities for growth and innovation. Plus, in the wake of the pandemic, tech departments actually increased their outsourcing spend from 12.7% in 2019 to 13.6% in 2020, showing a continued reliance on offshore talent.

So, in my view, the impact of offshoring is a mixed bag, but it’s definitely not all doom and gloom. As long as we continue to adapt and innovate, I believe we can make this work for everyone involved.

What are the global effects of Offshoring?

Choosing to base your company in the United States or another Western country and hiring software developers who are based in Eastern Europe, Latin America, Asia, or another country go together like peanut butter and jelly.

When your business thrives, you’re doing good for you, your employees, your community, and your country. When you pay offshore talent to contribute to the development of your product, you’re doing good for them, which means they can do good for their family, their community, and their country.

Offshoring boosts economic productivity in both places. It’s a global slam dunk.

Keeping working conditions above par

Back in the day, a typical argument against Offshoring was that Western companies were using emerging markets to find people who need work, and ignoring the environmental, health, or safety standards in the process. That’s an antiquated stance and one that TurnKey actively dismantles every day.

We can’t speak for other firms, but our standards do not allow for things like child labor, unsafe workplaces, unfair wages, unregulated hours, etc. Local legislation implements specific systems and processes to uphold policies that are in place. Things like continuing education, training sessions, and leadership development are all monitored. The firm you use should adopt protocols to qualify and requalify suppliers and business partners.

At TurnKey, we not only ensure our offshore software developers work in safe conditions, are paid well, can continue education, and are treated just as your home staff is, we go above and beyond to enhance corporate spirit, boost employee retention, and create a positive influence.

Keeping wages fair

The mentality that “you get what you pay for” definitely applies to things like fast food and see-through workout tights. But it simply doesn’t apply here. When you engage in Offshoring, you aren’t paying someone less and receiving a product that is equally less-than.

The cost of living (and other broader economics) determines the salary range, not the level of work you’ll get. Software developers in these Offshoring countries have honed specialty skills in niche areas—skills you and your product need.

Agreed upon rates are just that, agreed upon. The developers and engineers don’t feel slighted, and you won’t either. In fact, you’ll be elated because you’re getting everything you bargained for from a work product standpoint. And your hired hands are getting amazing experience, immersing in a Western company culture, and feeling solid about the work they’re doing.

On the cost of living front, take this for example: Current consumer prices in the United Kingdom are about 220% higher compared to regions in Asia that are popular Offshoring locales. That means that you can hire engineers there at around $25-40 per hour. What may feel like a low rate to you, feels like a generous income to those who live and work there.

Source: Dev Community

At the end of the day, they win and you win. And let’s be honest, a $500 t-shirt is still just a t-shirt. A high price doesn’t always guarantee high quality. But when you choose the right offshore development partner (like TurnKey), you gain access to the high quality talent you want, at the price you can afford. BOOM.

Why TurnKey is your all-in-one solution

We feel your pain. We have experienced every uncomfortable situation, made every possible mistake, and endured every Offshoring mishap. Along the way, we became tired of looking for the perfect offshore development company—and decided to create what we couldn’t find.

We give YOUR business what you need, focus on infusing YOUR culture into the workforce, and highlight YOUR product above all. We deliver a scintillating buffet of qualified talent (not whoever is on the bench), along with the ability to scale, low costs, and high speed.

With TurnKey, you get a team that is fully dedicated to YOUR project. You engage in meaningful ways, maintaining and enhancing YOUR culture, since you embed all teams within the organization. We rely on YOUR vision and the development team uses YOUR roadmap. You hire employees from YOUR ideal locations, ranging from Eastern Europe to Latin American countries. All of that is the key to YOUR success. It’s exactly why we built TurnKey the way we did, and why we have so many satisfied customers. (The white glove service doesn’t hurt, either.)

Some final thoughts

The bottom line is, don’t look back. Offshoring has evolved. At TurnKey, we are happy to have our foot on the gas as part of this forward motion. We care about you and your product, and we care about finding and hiring quality talent, paying them well, and making sure they remain happy. That’s what makes your product shine and frankly, it’s just good karma.

Jump on the international bandwagon that is Offshoring and watch your productivity soar. Working with TurnKey will ensure, too, that you can look yourself in the mirror every day and sleep like a baby at night. We do it right, period.

FAQs

How do you ethically outsource?

Sure! At TurnKey, we always follow all the necessary standards and policies established by local legislation. Our offshore software engineers work in safe conditions, get the appropriate payments, and have great opportunities to educate. That can be proved by outstanding team spirit, increased employee retention, and the positive impact we create.

Is offshoring ethical or unethical?

No doubt, the offshore model has different consequences that you may consider ethical and unethical. It often depends on the interpretation made by a particular organization. Although many IT specialists may worry about their unemployment, the research shows that offshoring is good for the US economy.

Is it ethical to outsource jobs?

Traditionally, companies use outsourcing because of competitive necessity. But at the same time, they intend to follow local regulations and practices and consider the staff needs the priority during the process. In this case, outsourcing is always an ethical action.