Cheap as chips: Do you really get what you pay for?14 Jul, 20234 mins
Finding a cost-effective way to source talent is one of the most strategically important dec...
Finding a cost-effective way to source talent is one of the most strategically important decisions that a company will face. And as salary inflation shows little sign of slowing, many employers will be considering alternative ways to fulfil their network talent requirements. Eastern European is emerging as an oasis of affordable and skilled talent, luring many to outsource there.
But it is really all it’s cracked up to be? Before you jump on the band wagon, we’ve pulled together some of the pros and cons to help you to decide what model suits your organisation best.
Technology has evolved to make our world smaller and closer and the pandemic has further banished the notion that physical meetings and resources are necessary to develop a trusting relationship in the workplace. As a result, and unsurprisingly, outsourcing has raised its head above the parapet as a cost-effective solution to hiring challenges.
Eastern Europe is fast becoming the go-to-destination for those yearning for low-cost labour and top-notch expertise. According to Deloitte’s Global Outsourcing Survey 65 per cent of companies that outsource, do so in Central and Eastern Europe (CEE). So, what is all the fuss about?
Reducing labour costs are the main driver behind outsourcing decisions, not only can it minimise prices for salaries, overheads and equipment, it can also give companies greater control over the costs, paying for services on an ad-hoc basis only when necessary.
But the ROI of outsourcing relies on the labour that you are paying for actually being any good. The idea of benefiting from the wide pools of talent that outsourcing firms can provide, only works if they can source the skills you need.
In Eastern Europe skilled workers are plentiful and affordable thanks to the CEE’s robust, cost-effective and quality education and university system specialising in skills such as engineering and science. But as the area becomes more highly saturated with companies and competition, prices could change.
Communication rules the roost in outsourcing relationships and can make the difference between a disastrous and successful partnership. Language barriers can often be the biggest obstacle to cultivating partnerships in other regions. But most Eastern European professions are highly proficient in English and other European languages.
Remote working may have made the geolocation of talent have far less clout, but time-zones still need to be convenient for all involved. Eastern Europe has at most, a manageable three-hour time difference from the UK, making organising calls and meetings far less complicated.
Culture and collaboration
Cultural affinity might sound like a very old-fashioned term, but its power to make or break a partnership should not be underestimated
Sharing similar cultural traditions, business values and personal qualities allows companies to work comfortably and efficiently in an atmosphere of mutual understanding. Experts claim that Eastern Europe outsourcing companies have an advantage over their Asian colleagues because they are more willing to collaborate and discuss.
Adversely, when teams belong to entirely different cultures, they may face ambiguity and misunderstandings that are disastrous when it comes to working as an integral unit.
Whilst Eastern Europe easily stands its own against its counterparts as an outsourcing destination, there are drawbacks that must be considered. After all your employees are your greatest assets and with the costs of replacing an employees that could be up to 213 per cent of their annual salary for highly educated executive positions, it is vital to ensure that you’ve read the small print.
Distance makes supervision grow stronger
Hiring never takes place in a vacuum and there will always be forces at play that are out of your control but outsourcing often requires taking a leap of faith and learning to manage unknown quantities – at least initially.
With this brings a heightened need for increased oversight and may require you to have a tighter grasp on processes and timelines.
Although technology has allowed for much closer collaboration and given rise to remote monitoring systems. Employers will need to consider the logistics around how they will monitor progress and ensure the quality of their project from thousands of miles away.
Being in a different country can also have the adverse side effect of instilling a feeling of reduced accountability within outsourcing companies and a perceived buffer from the backlash of producing lower quality work or for abandoning a project suddenly. Although legal recourse can help, the cost of bringing a project back in-house could be significant.
What’s more an outsourced firm with no ties to the core company and its values, and with other projects on the go, may lack the same level of motivation to see a project through to successful completion and your needs may not get the attention they deserve.
Data security is of paramount importance, and there is always the risk of confidential data leakage, particularly because many offshore software development agreements are signed in a hurry and without an NDA. These corners cannot be cut, and you must take appropriate administrative and legal measures and discuss these with your outsourcing partner.
Even in today’s era of technology, there are no one-click solutions to transfer money overseas, including in Eastern Europe. You may run into currency conversion issues and certain countries do not support the use of certain applications, such as PayPal.
There can also be confusion around taxation policies. Some Eastern European countries do have very favourable tax rates, but this isn’t the same across the board. The mix of obscure and convoluted rules can make the system confusing and must be carefully checked.
Fundamentally outsourcing talent isn’t a guaranteed cure to your recruitment ailments. There are lots of elements that need to come together to make the process smooth and worthwhile. Employers must ensure that their processes are thorough, watertight and can be easily monitored. If done so properly, outsourcing could provide opportunities to tap into new cheaper talent streams, but with it also comes elements of the unknown and may require a level of observation that you are simple unwilling or unable to provide.
Cultivating and refining your recruitment process is an art and it may be worth investing in a partner who puts in the time to understand your individual needs and uses their specialist knowledge of the industry to build practical and tailored solutions to your hiring challenges. Luckily Hamilton Barnes does just that, we specialise in taking the stress out of the process and sourcing quality candidates that tick every box.