The Best Outsourcing Model for Healthcare Technologies

In many industries, outsourcing is still viewed negatively. The tech industry is no different. Many companies believe that outsourcing is used to produce products cheaply, and at the expense of quality. Challenges in communication, and lack of real skilled talent, mean that so many tech companies avoid outsourcing. 

However, the tech industry, and the digital health industry by extension, is facing a real staff shortage. The tech talent pool is limited, as demand for skilled workers continues to increase. The tech market is always growing, as new innovations arrive on the market each day, and companies need to scale up their workforce to compete with demand. Despite this, the number of training and skilled developers dwindles. 

So, if you can’t recruit in-house for your development projects, what do you do? Outsourcing could be the solution. To avoid issues, it’s important to find the right development partner, and create a cohesive relationship rather than a contractual one. Before choosing a partner agency though, you need to consider which outsourcing approach is the best model for your business.

Offshore

Offshore is perhaps the most widely recognized outsourcing approach. Offshore IT outsourcing involves sourcing development talent from teams based outside the country. 

Typically, the offshore agency is located thousands of miles away, in countries on the other side of the globe. For instance, in western circles, companies commonly partner with those in India or Columbia. They operate in a different time zone, and often speak a different language. 

When companies consider outsourcing their development, this outsourcing model is often the first that comes to mind. Offshore outsourcing is known for its cheap labor costs. However, there are other advantages, and difficulties, to offshore outsourcing. 

Benefits

As mentioned, one of the most prominent benefits of offshore IT outsourcing is the reduced costs. Labor costs are lower, as the cost of living and standard wages are lower than in western countries, and contracts are far more reasonable. Needless to say, this improves the project’s profit margin, and reserves budget for other resources. 

Not only that, but the offshore outsourcing model also provides the opportunity to widen your talent pool. As mentioned, one of the major challenges in digital health development today is finding skilled engineer talent. In-house teams are often forced to look locally, narrowing down the available candidates. Offshore agencies can take advantage of talent located near them, that you wouldn’t otherwise have access to. 

Challenges

While the distance between companies allows the project owners to benefit from reduced costs, it also brings challenges. As mentioned previously, the outsourced team will be located in a different time zone and speak a different language. 

Offshore teams will typically operate within opposite hours to the home development team or IT company. Language barriers and time zones can generate difficulties with communication. Problems cannot be solved quickly, as each side needs to wait for a response, causing unnecessary delays. Mistranslations can lead to mistakes. 

Similarly, the distance between companies makes quality control particularly challenging. The project managers must trust that the offshore team has sufficient quality control processes in place, or face lengthy journeys to monitor progress.

For healthcare technologies, mistakes or overlooked problems aren’t an option. The end solution might be used to manage healthcare facilities, allow access to necessary healthcare or medications, or help patients self-manage their illness, for example. If the solution doesn’t perform as promised, or has bugs, there could be serious consequences. 

Not only that, but the healthcare industry is highly regulated. Laws like HIPAA in the US, and GDPR in the UK, prioritize the protection of patient data, which is particularly important in today's digital world. Digital health solutions must handle patient data securely, and keep private information safe. Again, bugs and coding mistakes could be costly. 

Nearshore

The nearshore outsourcing model is similar to the offshore model, but the team is located closer to the original company. For instance, if offshore companies are thousands of miles away, nearshore companies are typically based in neighboring countries, or within a continent. It’s the middle ground between the onshore and offshore models.  

Nearshore outsourcing is more common in European countries, as transport is easy, and countries are very well connected across the continent. 

Benefits

Nearshore IT outsourcing provides similar benefits as offshore outsourcing. For those that can make use of the approach, labor costs are lower. They may not be as low as full offshore outsourcing, but this depends on the available neighboring countries. Cost-effective labor increases the potentially available profit margin. 

Due to the location of nearshore teams, quality control is much simpler. Neighboring countries are more accessible, whether by train, car or plane. Therefore, the original project managers are able to visit outsourced teams, and ensure that best practices are followed. 

In digital health development, this is critical to the security of patient data, and the safety of users. However, do bear in mind that accessibility will vary depending on the location of the original company. 

Challenges

The nearshore outsourcing model can provide similar difficulties to the offshore model. Neighboring countries don’t always speak the same language, and aren’t always in the same time zone. Depending on your choice of outsourced team, you may still face difficulties with effective communication. As mentioned previously, communication is critical in digital health development. 

Nearshore IT outsourcing falls between offshore and onshore, therefore costs are also slightly more than total offshore outsourcing. Again, this does depend on the location of the chosen team, but typically neighboring countries have similar wage expectations as the original company. Considering nearshore faces some of the same challenges as offshore outsourcing, is it worth the extra cost? This is something to think about before utilizing this approach. 

Onshore

It goes without saying, then, that onshore outsourcing involves outsourcing your project to a company based locally, within the same country. It might also be referred to as domestic outsourcing. 

Nearshore is a less common outsourcing model, as the company can hire in-house and build their own team of employees for a similar cost. Onshore outsourcing is mostly used when a company has no staff to begin the build process for a project. 

In this case, the original company relies entirely on another company for the build, and focuses on managing the project and finding the right market. 

Benefits

Onshore outsourcing eliminates the primary challenges presented by offshore and nearshore sourcing. Since the outsourced staff are located in the same country, both partners will speak the same language, and work the same hours during the day. Communication is much more fluid, and there’s less room for error. 

Similarly, the original project owners can maintain control over the build process. Quality assurance teams or quality control managers can easily monitor the outsourced teams, and ensure that expectations are being met, and best practices are followed. 

The onshore model does offer scalability for teams that are looking to expand with a project. Hiring is challenging, and time-consuming. The digital health industry moves quickly, and there isn’t always time to grow in-house teams to meet industry deadlines. If you need talented staff, quickly, onshore could be a swift answer to the problem. 

Challenges

While onshore sourcing addresses the communication challenges of the other models, it is less cost-effective. Ultimately, labor costs are the same in one country, regardless of the company. Salary expectations must be met for the skills provided. 

Therefore, if you’re going to pay for an onshore team, why not recruit an in-house team? Outsourced developers are less likely to be loyal or dedicated to your specific project, and you have no control over their employment conditions. 

While onshore sourcing could be a way to scale your project quickly, it’s perhaps not the best long-term solution. Onshore outsourcing requires an equivalent or more initial outlay, for the same result as hiring in-house.

Follow the Sun

In digital health development, you need the best of both worlds. Control over quality and compliance is critical, and you need to have the staff to complete your project. Outsourcing addresses recruitment delays, but the wrong approach or software engineering partner could cause delays and errors with the final product. 

The follow the sun development model meets the needs of the modern digital health development project. In this model, teams are located in countries around the globe, in parallel time zones. Each time zone hands over to the next at the end of their working day. 

As handovers occur on a daily basis, communication and best practices are the priority. By utilizing the follow the sun model, you benefit from reduced labor costs and an increased talent pool, while maintaining strong lines of communication with development teams. All workers follow the same best practices, and must work cohesively to produce a quality solution. 

Not only that, but working in a relay-style formation provides up to 24 hours of development work per working day. This means that your project can meet its deadlines, and receives more development hours before it reaches the end-user. 

At Vertrical, our teams utilize a follow the sun approach. We have digital health experts based around the globe, ready to start work on your digital health project. Our solutions are built with compliance at the heart, and we are able to staff the best talent from across the world. Get in touch with us today to discuss your next healthcare technology project.