Why outsourcing/outstaffing services is a great risk-off strategy

Why outsourcing/outstaffing services is a great risk-off strategy

Author: Dmytro Naumenko

31 Oct 2021

Why outsourcing/outstaffing services is a great risk-off strategy

Investors are well-versed in risk-on risk-off strategy, but startup founders might not be as experienced with it. In short, when the economic conditions are risky (like during the 2008 banking crisis), investors prefer to keep their money in low-risk assets, like US treasury bonds. Vice versa, when the market is stable, investors have a higher risk appetite and are more likely to invest in projects with bigger risks — and better potential yields.

What does it mean when applied to business? During the crisis times (like the coronavirus pandemic), most businesses prefer to follow a risk-off strategy by halting the development of new projects and products, conserving cash, laying off non-critical employees, headhunting crucial talents from competitors, etc. Everything works to keep your boat afloat, eh?

However, when some company curtails their initiatives, an empty space appears on the market, which means room for growth for a bolder company, which perceives crisis as a risk-on opportunity. Just make a Queen’s Gambit: instead of folding your development projects in the headquarters, outsource them to a reliable technology vendor in Ukraine.

Benefits of outsourcing/outstaffing to Ukraine

Why outsource to Ukraine and not Poland, India, or the Philippines for that matter? For several reasons:

  • Ukraine has the world’s 4th largest pool of certified software developers (over 200,000)
  • Many Ukrainian IT companies were working remotely long before the lockdowns and the IT industry as a whole adopted remote work quite quickly and efficiently
  • Most IT specialists in Ukraine are already vaccinated, which lowers the risk of abrupt project halts due to leading talents falling ill
  • Ukraine is a renowned IT hub with polished outsourcing/outstaffing processes, good English proficiency overall, and cultural fit with Western companies.
  • did not risk writing about low Covid-19 rates, they are currently skyrocketing

Well, this all seems fine and fair, but what about the money? Outsourcing to Ukraine provides several important benefits in this regard:

  • You can easily establish a legal entity here or work through your technical partner’s entity
  • All the management processes are legal and transparent
  • Favorable taxation for IT services
  • Big liquidity of job market, as talents constantly finish previous employments and are ready to engage on new projects, reducing your recruitment expenses
  • Polished business processes both for recruitment of new teams and for software delivery, ensuring timely project kick-off and successful completion.

Okay, but how to know whether outsourcing is the right solution for your situation?

When to outsource/outstaff software development?

First, let’s make a clear distinction:

  • Outsourcing means delegating some tasks entirely to an external team or specialist. The difference with hiring a freelancer here is that you outsource to a vendor, not an individual, and have contractual obligations much more reliable than promises on Upwork
  • Outstaffing means hiring remote talents from a technology vendor for some period of time. This way, you keep the responsibility for the tasks within your organization and just bridge the skill gaps by hiring the needed talents for the duration of the project.

What are the benefits of such approaches for your business?

  • instead of waiting for an uncertain time to hire a talent in-house, you gain instant access to a pool of experts who can provide value from day one
  • good old costs reduction, as hiring a senior developer in Ukraine will cost at least 50% less as compared to hiring in the US, due to a much lower cost of living there.
  • external resources integrate into your delivery process, use your communication channels and issue tracking systems, report to your project managers, etc.
  • access to rich expertise, as while some tasks might be new and challenging for you, they can be quite menial for your outstaffed employees and they might have ready solutions for the roadblocks you face.

Thus said, you can offset multiple software delivery risks by outsourcing /outstaffing to a reliable technology partner.

Wrapping up

The question is — where to find such a partner? We will say it without any false modesty — Spintech is the right choice. We have ample expertise in building expert teams to empower our customers’ projects. Take a look at our portfolio and hear what clients have to say about us — and you will see that Spintech can become the factor that will turn a risk-off situation into a risk-on opportunity for you! Should you want to try it out — contact us, we are always ready to talk business!