How You Can Save IT Project Budget By Using Offshore Teams?

By establishing an offshore development center in countries like India, companies in the West gain access to a massive talent pool that they can leverage to scale quickly. However, offshoring has also become increasingly popular because of one factor – cost.

The fact that you can hire talent at a significantly cheaper payroll is attractive to a lot of companies who are looking at tight IT project budgets. In such a scenario, can you go offshore and reduce operational costs enough to increase your profits? What are the actual financial benefits of investing in an offshore software team? In this post, we explore these questions and more.

The big question: Why are IT project budget overruns so common?

Research conducted by McKinsey and Co showed that 66% of all IT projects overshoot their budget – that’s 2 out of every 3 software projects in the world! And it doesn’t stop there. Another study conducted by PMI stated that 14% of all IT projects fail, often in spite of overshooting their budget. So, why does it happen?

• An unrealistic estimate of the budget
• A communication breakdown between the people involved in the project which can lead to a very expensive mistake
• Changes in the scope of the project
• A shaky foundation which is a result of poor planning
• A lack of leadership and coordination between the team members

These are just some of the many different reasons why IT project budget overruns are becoming increasingly common. However, At The Scalers, we’re more interested in the ‘hows’ rather than the ‘whys’, which brings us to the next important question:

How can offshore outsourcing teams become financial game-changers?

For instance, say you have a 20-person in-house team in Paris – one of the most expensive cities in the world. Now, if you partner with an offshore development company and hire the same team in Bangalore, also known as the Silicon Valley Of Asia – the salary difference alone is quite substantial. And we’re not talking about “cheap labor”. We’re talking about value for money – the same ranks, quality, and experience.

Why is there such a big difference?

The salary of an average developer in India is at least 3-4 times cheaper than in the West, owing to the lower cost of living. The cost of living in India is also 3-4 times cheaper than in the West, which means more disposable income for your employees.

And that’s not all. To add to this, the total cost of doing business, including premises, admin, legalities, insurance, and other employee-centric benefits, is no more than 50% of the cost of your in-house developers’ salaries.

Read more to know about IT projects budget

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Created on Sep 7th 2020 23:17. Viewed 467 times.

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