It started to happen more and more often. European companies, once fond of offshoring and outsourcing their operations to countries like India and the Philippines, are now shifting their focus towards Eastern Europe.
What are the problems of with offshoring that make companies seek alternatives?
The three trends are obvious:
In my line of work, I come across this reality often. Collab Fabrik (an EOR+PEO operating in Europe and Armenia) started when every other IT company was considering freelancers from Asian countries. It was a regular practice to hire a developer in India. It was also the most cost-effective option. Since, years of experience showed that the results were not always satisfactory.
In the parallel world, offshoring, which was the mainstream process for companies looking to cut costs, started to show its (un)effectiveness over time. Companies spent huge budgets on setting up teams and processes in distant countries, only to realize that the costs of managing these operations (plus the cultural barriers) outweighed the benefits.
What’s the way out? Cooperating with EOR+PEO companies and exploring new lands like Armenia are things that many companies already do.
When the business is based in one to three or a few more specific countries, it makes sense to establish the second or third office in a country with a lower cost of living. If your business has a long-term perspective and you’re constantly investing in intermediaries to make sure the processes are working correctly, it’s better to have your in-house team and invest in one-time educational activities.
That’s the logic that led most businesses to prefer offshoring for years. Then, the challenging part of working with people who speak different languages and come from different cultures emerged.
Challenges of offshoring became more noticeable.
If I summarize what hiring managers, CEOs, HRs, and other people in charge of the operations that require offshore workers say, it will be This. Nothing is more expensive than having peace of mind that your global team’s operations are going to be smooth, and the results will be delivered on time.“
Offshoring problems such as cultural and language barriers, time differences, and the need to constantly monitor and manage remote workers can create a lot of uncertainty and difficulties. It takes time to realize that the initial cost savings from offshoring may not be worth the stress and effort of managing these operations.
Delegating to a local or global employer of record who has a perfect knowledge of the hiring country and is specialized in employee relations, payroll, and tax compliance in the country your business is expanding into can reduce the risk of dealing with hassles. This way, you avoid spending time studying local legislation and save money on legal consultations.
That’s why EORs are gaining the title of the best approach for businesses that want to expand globally. They know what are the problems associated with offshoring and are ready to smooth them for employers.
Regarding hiring destinations, India, the Philippines, and similar locations have been a good choice for years. Until they became so popular, the talent competition grew. Also, salaries rose, tax regulations changed, and the quality of work had downfalls more often.
The wow concept of low-cost full-time employees from India was a game-changer for a while. But India is not the only country with low costs of living and salaries. There are nations with better skills and the same cost-cutting principle.
With the rise of EOR businesses and offerings, the IT hiring map has been evolving. Employers have a wider choice of talent hubs to pick from – realizing many unexplored lands can offer better hiring opportunities.
As the founder of an EOR+PEO that has built 40+ remote teams in Armenia for EU companies, I can confidently state that Armenia is breaking into the game.
During the past few years, Armenia has been rising in global software development rankings. This is due to its talent pool and high-quality education system. Its proximity to Europe, favourable time zone for European businesses, and cultural and language similarities make it an attractive destination for IT outsourcing.
Armenia’s exploration as an IT outsourcing destination first started with the establishment of global IT giant subsidiaries in the country. In this small country, global IT companies such as Microsoft, Adobe, Oracle, Siemens, Miro, Nvidia, Philip Morris R&D Center, and many more have offices with quite large headcounts. With their presence, the country has gained international recognition and trust for its high-quality talent pool.
Armenian youth gets practice and experience in the companies that dictate the rules and set the trends in today’s IT world. This raises the bar for the local tech community, resulting in a highly skilled workforce with cutting-edge knowledge and expertise. As a result, Armenian developers are best choice of top companies worldwide.
You’ll be pleasantly surprised to discover that locals are in the same wave with all the recent trends and technologies as US-based specialists because their work styles, tools, and approaches are the same.
Sharpening skills in the working environment for the industry’s big names, along with the support of a progressive and innovative education system, produces a highly competitive workforce.
Yet, the cost of living and salary expectations are significantly lower than in other IT hubs such as Silicon Valley or New York. This combination of high-quality talent, competitive prices and cultural compatibility make Armenia a desirable destination for companies. It’s perfect for those looking to outsource their IT needs.
Collab Fabrik has over 40 teams under its umbrella built for various clients from different corners of the globe. The range of specialists varies greatly. From specific tools and languages experts (Salesforce specialist speaking in German) to fully-fledged product teams (the whole product team creating an educational platform), Armenia’s workforce provides enough flexibility to meet the demands of any client.
With numerous success stories, these teams have proven their ability to deliver high-quality products and services. They also maintain effective communication and project management with their clients. This has resulted in long-term partnerships, repeat business and a growing reputation for Armenia as a top outsourcing destination.
And if you ask me what are the problems associated with offshoring that the outstaffing agency solves, my best answer will be this. We eliminate the cultural and language barriers by acting as local intermediaries who know both parties well.
The Collab Fabrik team has mostly Armenian roots while studying and working in Europe. Two ties firmly connect the CF team to both areas of hiring.
We know Armenia, its people, its strengths, and its best practices. We are also deeply into what EU companies want to achieve through outsourcing.
This unique combination allows us to effectively match our clients’ needs with the best talent in Armenia while also understanding their business goals and expectations.
A quick and free consultation with me will help us deliver the best offer for you. It’s true for a small project or a long-term partnership.
