Offshore offices: the future for startups and staff?

The days of long train and heavy traffic commutes feel like a distant memory. Many of us have forgotten what rush hour feels like. It’s not often dreams come true. It’s also not often they come true without a catch. Now anyone can work from anywhere, why should businesses keep paying expensive locals when they could pay someone 6000 miles away $6000 a year?
Offshore offices: the future for startups and staff?

In the United States, 52% of full-time and 37% of part-time tech employees are WFH

67% of Australians are working from home at least some of the time.

For obvious reasons, IT and development are the most prepared for remote work. With the average salary around USD $120,000, it’s good work if you can get it. But now, there’s competition. 

An Indian software engineer would expect an average salary of around INR ₹600,000 or AUD $10,800. There are highly-skilled workers across Asia and Eastern Europe ready and willing to do exactly the same job you do. 

It turns out the remote work dream might come with a huge downside.

Approximately 30,000 jobs were outsourced to the Philippines by major Aussie countries over the last few years. Now that remote work positions have increased by 95% in Australia, should job seekers be worried? And should startups be jumping on the trend?

Check your sources

Unfortunately for Australian employees, the comforting adage “you get what you pay for” isn’t always applicable. 

When what you pay for is a degree-educated Indian software engineer from “India’s Silicon Valley” Bengaluru, you’re likely getting quality and productivity to rival, well, Silicon Valley.  

It’s an easy win for the bottom line of cash-strapped startups. However, outsourcing is not a panacea. 

Creative energy flows best when everyone is in the same room. Coordinating deadlines across time zones is tricky. Let’s say your outsourced developer needs a requirement verification, so they submit a ticket. But it’s midnight in Australia, so they lose 8 hours awaiting a resolution. 

In the early days of testing, hacking, and iterating, trying to hit that MVP on a shrinking runway, 8 hours is a lot to lose. 

Then there’s communication. It’s harder to build relationships between screens. Remote employees may not be as “bought into the mission” as people you see regularly in person. They may not be motivated to go “the extra mile” or create those little efficiencies that multiply your operations in the long term. 

Meaning can get lost to even the most fluent second-language English speakers. Cultures can differ, tone of voice can be hard to convey. 

Then there are artistic implications. Look at the design differences between Japan and Australia. While outsourced IT talent may make a great website, they may fumble on native nuances.

This is a particular problem for those leaning on the homegrown, salt-of-the-earth, local brand personality to win Aussie audiences. 

Then there’s the legal stuff. If you outsource the build of your company website, will it comply with Aussie customs, cybersecurity, privacy? 

How are you paying your staff? Can your accounts team handle international bank transfers? What are the tax implications?

Perhaps most concerning of all is ongoing support. Outsourced contracts tend to be temporary. If a developer codes something a little weird in the nascent stages of your app and then disappears into the ether, you can spend weeks (and much higher local wages) trying to unravel it. 

Industry standards not being followed can turn what you thought would be a quick and easy turnaround into a complete nightmare with serious implications.

There’s a lot to be saved by outsourcing, but a lot to be said for keeping things in-house. 

Antisocial work

When it comes to the biggest WFH challenges, employees regularly cite missed social interaction. The vacant human element can impact wellbeing, creativity, efficiency, and psychological safety and trust between employees.

In a webinar on remote work, MIT Connection Science Director Alex Pentland says: “Employee trust, solidarity, and mental health rely on the hundreds of minute affirmations and gestures of support that we offer those around us every day: expressions of understanding or empathy, nods of courtesy, morning greetings.”

Aside from employee mental health, remote work is thought to stunt long-term innovation and growth

IBM pioneered full-time remote way back in the 1980s; but they called everyone back to the office in 2017. Why? Over-reliance on telecommunication meant slower decision-making and poorer experimentation.

Naturally, they’ve since rejoined the great experiment. But it was out of COVID-related necessity and the pressures of the new world of work. Not because it worked last time. 

The Aussie question

As always, things are a little different for Australia. 

We have vast distances to cover. We have to fly between head offices (and god knows that’s rapidly falling out of favour). Our small, spread-out population means we’re much shorter on talent than our friends in the US or Europe.

33,523 Australian businesses already outsource their IT support teams in 2022. This is a 2.5% increase from 2021. When it comes to the BPO industry, the Philippines are Australia’s first choice.

Seeing as we’re having to go the distance anyway, doesn’t it make sense to outsource things that little bit further? 

As always again, the key is striking a balance. 

Outsourcing works best in small, strategic increments. Outsource what you can, but leave mission critical things like your branding and your app development to staff who are familiar with your culture and product. 

Work mostly with people who share the same time zone.
And when it comes to WFH, let staff think for themselves. 83% of employees prefer a hybrid model. Giving them the decision isn’t just good for morale, it empowers them to answer the question: “where am I most productive?”

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