Love it or loathe it, offshoring in the telecommunications industry is here to stay, at least for the foreseeable future. However, offshoring is not always the best way to cut costs. It’s true that by outsourcing activities such as software architecture, operations and even R&D, technology companies can become more competitive. But significant savings can also be made by outsourcing to a local company that has the right skills and cost structure.
The pressure on telecommunications companies to develop new technologies while simultaneously reducing spending is immense. This is due in no small part to the rapid rate of digital transformation. Yesterday’s fanciful idea quickly becomes today’s must have. In this environment, we are seeing remarkable advances in the internet of things (IoT), big data, virtual reality (VR) and augmented reality (AR), to name but a few.
Each of these innovations promises – or threatens – to have a huge impact on the telecommunications industry. For a start, they all demand faster processing times and more bandwidth. In its report VR and AR: The Real Deal! Cisco predicts VR and AR traffic to increase by 127% per annum until 2020. Meanwhile, traffic forecasters already talk in terms of Petabytes (the number 1 followed by 15 zeroes) and Exabytes, which are 1000 times larger.
For industry players responding to these requirements, offshoring has the obvious benefit of cost reduction. Some argue that it can also improve quality and effectiveness. On the other hand, offshoring also raises questions about security, customer service and the loss of local jobs.
There is also the issue of unexpected costs, which can arise due to:
- The process of selecting a supplier
- Travel for liaison and supervision
- Transitioning to an offshore model
- Local redundancies
- Ramping up with new suppliers
- More expensive management processes
The online magazine CIO.com has long argued that these costs can add between 16% and 65% to an offshored IT project.
As a professional services supplier to the telecommunications industry, Hidden Cove is familiar with this debate. Our guiding principle in business is “enabling the success of others” and we apply this when it comes to offshoring.
We see ourselves as a quiet haven of creative talent and cost-effective results. In practical terms, this means our clients can choose to make savings and innovate by outsourcing to a local supplier. An added advantage is that all client contact – including support – is conducted by our local staff.
It’s not a matter of offshoring or not. Rather, it’s about ‘right-shoring’, or knowing when to offshore and when to keep it local.