How HR Can Help Reshore Tech

Advantages Are Narrowing

​Why the shift back to the U.S.? Increasingly, business leaders are finding that the benefits of offshoring just aren’t as substantial as they once were. Besides, there’s something to be said about being able to find critical IT support down the hall rather than across the ocean.

Companies of all types may have initially realized the cost savings they sought when they moved overseas, Larkin says, but over the last decade the differential has started to shrink in some places. For example, labor costs in India have been rising 10 percent year over year, he notes. Wages and benefit costs also have been increasing substantially in China and other foreign nations.

Some of the jobs that were in those countries now go to Eastern Europe, particularly Romania, or to the Philippines, Larkin adds, but many employers are coming home.

​“There are plenty of companies that have a good offshore experience, and reasons to offshore are valid. But after they’ve their dipped their toe in the pool, a lot come back,” he says.

Many businesses were not factoring in the true costs when making the leap offshore, says Craig Shaneck, sales manager for TPA Technologies, an IT recruiting firm based in Boston. Now, “there are better metrics about what it is costing you,” he says. “The hourly rate is not the end-all, be-all metric. The offshore partners will say, ‘Sure, we can do it for this, for so much an hour,’ but what is the total cost?”

An arrangement that requires taking an 18- to 20-hour plane trip to straighten out problems can be difficult to maintain. “There’s more management and oversight and soft costs attached to offshoring,” Larkin says. And the quality might not be what you’re used to. If employees, customers and managers receive sub-par service from overseas tech support, “user revolt” may result, making it more likely that companies will reshore operations, he says.

Language barriers, time-zone differences, cultural mix-ups, unfamiliar laws and regulations, and infrastructure issues can make it challenging to get the job done efficiently overseas. Moreover, workers’ physical security in places where there is social and political unrest is also important to consider.

Cybersecurity is yet another risk. A 2016 University of Maryland study ranked 44 countries based on their vulnerability to cyberattacks. China and India were among the most susceptible nations. The U.S. was rated the 11th safest country in the world. (Denmark, Norway and Finland were the most secure.)

“Security is a bigger and bigger concern. You hear about one kind of disastrous security breach after another,” says Shaneck, who is based in Dallas. It’s especially a problem for companies that contract out their IT work overseas. “You’re not as sure [protocol] is being complied with as when you own it. Are your data, intellectual property and even trade secrets secure?” he says.

HR professionals have particular reason to be concerned about privacy breaches because of the personal nature of the information they collect, says Carol Olsby, SHRM-SCP, who runs Carol Olsby & Associates Inc., an HR consultancy in Seattle.

In the end, “to be global is not as easy as you think,” she says. “A lot of companies say, ‘We want access to talent, so we’re going to this country.’ But they don’t understand the landscape, they don’t understand how to monetize the situation. Home is easier to manage,” Olsby says.