Finding qualified employees has always been problematic, as your business’s success and prosperity depend on the people you hire. Nowadays, the heated competition for skilled talents, especially in tech, is additionally complicated by the continuously increasing cost of recruiting an employee. Based on the latest trend, the Employment Cost Index, which includes wages, salaries, and employee benefits, has reached its maximum.
What can a business owner or C-level manager do to manage the increasing hiring and employment costs? – Choose the right model of employment.
Fortunately, globalization enables businesses to hire specialists without being tied to local markets. You can hire an offshore development team somewhere in Eastern Europe instead of hiring in-house teams to cut expenses and reduce the time to hire.
Learn more about the pros and cons of offshore vs. in-house hiring models in our blog post.
Hiring In-House vs. Offshore: Main Characteristics
Let’s clarify the fundamental difference between the two approaches. In-house recruitment is when a company hires new employees locally as a part of its internal staff. They go to the office and work side by side with other team members. With offshore outstaffing, you hire an offshore team in a remote location, usually through a third-party software development or recruitment agency. They do the recruitment for you and manage the cooperation of the remote teams and your local staff.
Pros and Cons of In-House Team Recruitment
Comparing offshore vs. in-house team recruitment, hiring locally is a long-standing approach with many proponents. Managers prefer to see their employees in person to monitor their work, retain more control, and build stronger relationships. Check some other significant pros and cons of hiring an in-house team below.
Pros:
- Direct control and easier management. When hiring locally, you can interview candidates in your office to meet them in person and then keep working with the new hires side by side. You see what they do and when, which provides you more control over the process and simplifies management.
- Data security. A company that has all employees in one place can implement reliable data management practices and security protocols essential in the tech field more easily. You can also react to security issues more promptly.
- Enhanced communication. With in-house recruitment, all your employees work in the same office simultaneously, which simplifies communication and troubleshooting. There are also fewer cultural differences.
- Employee growth within the company. A non-obvious advantage of hiring in-house is building long-term relationships with your employees. They grow within your company, and you can considerably reduce knowledge leakage.
Cons:
- High hiring costs. Besides the fact that many local labor markets, particularly the US and Western Europe, pay engineers higher hourly rates, in-house employment comes with many hidden costs. You must pay for health insurance, social security, training, team-building activities, and other add-ons. It considerably increases the cost of hiring compared to outstaffing IT services.
- Competition in the local market. Companies operating in the US and Western Europe have to compete to hire an in-house engineer with FAANG and other leading world companies. Winning such a competition may be a challenge and take too much resources.
- Limited talent pool. When you are tied to a specific location, the pool of potential candidates is much smaller than hiring globally across multiple offshore locations.
Pros and Cons of Offshore Development
Outstaffing IT services to a remote team is a dominant tech market trend, with more and more companies hiring engineers globally.
Cost efficiency and quick hiring speed are the main drivers that make businesses work with outstaffed teams, but they are not the only ones. More about the advantages and disadvantages of such a remote work model below.
Pros:
- Cost-efficiency. Hourly rates of US software engineers are 25%+ higher than those of engineers with the corresponding expertise in Eastern Europe. Therefore, when you hire offshore, you can considerably cut expenses.
- Reduced time to hire. Since offshore locations usually have large talent pools and more candidates open to new projects, you will spend less time finding the right engineers. Besides, offshore hiring often involves cooperation with third-party software engineering or recruitment agencies that can match you with a suitable candidate in days.
- Ability to focus on core business functions. Offshore outstaffing services reduce the load on your main office, allowing you to focus on strategic business decisions instead of routine tasks. When a part of the team works remotely, you spend less time and effort on administrative chores, like arranging workstations, equipment, etc.
- Team buy-out opportunity. When you hire offshore from a recruitment agency with advanced staffing services like Sunvery, you can buy out an offshore engineering team at any moment of cooperation. You can start working with remote engineers on a temporary basis and then, if you are satisfied, make them a part of your internal team.
Cons:
- Project management issues. Due to time differences and distance, remote project management may be messy and more complicated. You must put in extra effort and cooperate with an experienced project manager to set up a smooth engineering process and align in-house and remote specialists.
- Communication challenges. Since offshore recruitment implies a significant distance between you and remote tech specialists, some cultural differences are inevitable. You will also have fewer overlapping working hours to schedule calls, which may hamper communication.
- Dependency on a third-party provider. If hiring remotely, you cooperate with a software development agency, it may make you dependent on them for quality of services and pace of development. To avoid this, consider cooperating with a recruitment agency that will connect you to remote engineers directly and act only as an intermediary.
Read also: 7 Cases When Delegate Tech Recruitment to an Agency
Hire Offshore vs. In-House: When to Choose Each Model
In some cases, outstaffing IT services to a remote location or hiring internally is not feasible for financial and other reasons. That’s why you must understand the benefits of both approaches and what works better in your case.
Offshore outstaffing yields maximum results if you want to optimize expenses and access the global talent pool. It allows businesses to increase profitability and achieve more with the same resources, gaining a competitive advantage. In-house hiring is an optimum solution for companies that value efficient management and want to grow locally.
Sunvery for Comprehensive Offshore Recruitment Services
Sunvery is a tech recruitment and staffing company operating in over 80+ locations globally. We are a team of experienced recruitment professionals who can help you find the right specialists for your in-house team or organize offshore outstaffing.
We offer flexible recruitment models for businesses with versatile needs. Use our recruitment services to hire qualified candidates fast in any location and incorporate them into your corporate structure. Or opt for staff augmentation to build an engineering team remotely while we organize operational support, including payroll, equipment, and taxes. With our staff augmentation service, you can also buy out the remote team at any point of cooperation.
Contact Sunvery to learn more about our recruitment and staffing services and get consulting on which is more suitable for you.