Keeping Business Onshore

Posted in Onshore | February 19, 2014 Keeping Business Onshore in the United States

Offshore Problems

Do you outsource your software testing to offshore companies? Are you thinking about replacing your in-house software testers with offshore software testers? If so, it may be time to rethink your strategy.

The economy of the United States is suffering, so it is staggering to hear that IT outsourcing reached an estimated $288 billion last year.1 This number has been trending upwards for years, and more offshore outsourcing can be expected. Job losses for IT professionals are rising, as many offshore professionals work for one-sixth of the US wage.2 Obviously, American companies will want to pay the lower wages to these outsourced workers compared to the high wages of a metropolitan US worker. While this has offered American companies cost savings in the 30% range, do the disadvantages of offshore outsourcing outweigh the benefits?3

Offshore outsourcing has the problems of language barriers, time zone conflicts, cultural differences, poor infrastructure, high turnover rate (~40%4), and inefficient software testing skills that often leads to rework (thus negating the cost savings). In addition, wages in offshore countries like India and China are rising 10-20% each year.5 Once salaries in these developing countries rival those of the United States and their prices become less competitive, companies will have to outsource to yet another country with cheap labor.

Another major concern regards security. Insufficient data security and the lack of data protection laws in offshore countries are potential liabilities that companies need to consider when outsourcing IT services. In particular, there is a growing security risk as more IT business is outsourced to China, as 80-90% of cyber attacks on websites in the Western world come from China.6 This is a startling figure for companies looking to safeguard their protected information.

Onshore Solutions

Given these issues and hidden costs, there is a definite need of an alternative to high labor costs. Fortunately, the alternative to offshore outsourcing is simple: onshore outsourcing. Cost savings for onshore are ~20%, admittedly less than offshore outsourcing.7 However, the cost effectiveness of offshoring is diminished by certain key factors that make onshore the better deal:

  • Minimized communication problems due to no language barriers, cultural differences, or time zone conflicts
  • Greater number of available qualified workers with the necessary skills, experience, and certifications (such as ISTQB).
  • Cost-effectiveness of rural service providers compared to major metropolitan areas
  • Greater security and safeguards for protected data
  • Clients still receive lower service costs by onshore outsourcing than using in-house software testers.

DeRisk IT Inc. is the solution to your software testing problems. We are an established onshore, offsite, veteran-owned company that formed in 1998, and have provided software testing services to clients in numerous verticals. Our areas of expertise include healthcare, banking, financial, insurance, and e-commerce software.

We employ ISTQB-certified software testers that are experienced in manual and automated testing in Agile and traditional environments. Certification gives a client confidence that a software tester has the training, skills, and expertise to do the job correctly. Certification across the board in an organization groups all testers on a level playing field with approaches, terminology, methods and testing principals in general. Therefore, this allows testers to have shared understanding with respect to the organization's testing processes.

Each of our software testers is certified in HIPAA Awareness, providing assurance that your protected information is safe. The United States enacted the Health Insurance Portability and Accountability Act (HIPAA) in 1996, as well as the Privacy Rule and Security Rule more recently. These ensure that business associates of healthcare companies comply and safeguard protected health information (PHI) of individuals. Software testing companies that work with healthcare software must maintain the standards, policies, and procedures set up to safeguard PHI. Offshore companies may not have the experience, training, or policing to stay compliant with this legislation.

DeRisk IT is passionate about software testing and keeping business in the United States. The cost of our functional testing service is competitive with offshore pricing, and without the hidden costs and disadvantages of offshore outsourcing. Contact us with your software testing needs.

  1. Britz, B., Young, A., Ng, F., Tramacere, G., Toombs, D., Bell, W., Blackmore, D., Roy, A., Tenneson, C., Petri, G.: Forecast Analysis: IT Outsourcing. Worldwide, 2Q13 Update. Gartner Research (2013)
  2. Fish, K. E. and Seydel, J. "Where IT outsourcing is and where it is going: A study across functions and department sizes," Journal of Computer Information Systems,Volume 46, Number 3, 2006, pp.96–103.
  3. Ibid.
  4. Williams, John. "'Onshoring' IT Services and Bringing Jobs Back Home." TechRepublic. 28 February 2012. Web. 17 February 2014. http://www.techrepublic.com/blog/tech-decision-maker/onshoring-it-services-and-bringing-jobs-back-home/7485/
  5. Booth, Tamzin. "Here, There, and Everywhere." The Economist. 19 January 2013: 1-14. Print.
  6. Anselmo, Kevin. "The Future of China's Outsourcing Industry." Duke University's Fuqua School of Business. 26 August 2013. Web. 17 February 2014. http://www.fuqua.duke.edu/news_events/feature_stories/china-outsourcing-arie-lewin/
  7. Fish, K. E. and Seydel, J. "Where IT outsourcing is and where it is going: A study across functions and department sizes," Journal of Computer Information Systems,Volume 46, Number 3, 2006, pp.96–103.