The COVID-19 pandemic is accelerating the growing trend toward remote work and creating a demand for software developers and engineers who can create, deploy, and maintain new technologies while collaborating digitally. Employers are rethinking the way they source and train talent to meet these new skill demands. We'll explore the pros and cons of outsourcing and upskilling as viable talent strategies for resolving skill shortages within organizations.
By Kimberley Whyte
A skilled workforce is essential to the success of any business, and as a result of the pandemic disruption, employers are now faced with the tough decision of choosing how to scale with limited resources. Two popular talent solutions have emerged: outsourcing operations externally and upskilling developers internally.
We’ll explore the pros and cons of both strategies to help leaders determine the best approach for resolving skill shortages within their organizations.
Benefits of outsourcing
The concept of remote work is common in the tech space. According to Statista, the pre-pandemic IT outsourcing market was forecast to reach approximately $413.7 billion by 2021. Today, businesses continue to search outside of their organizations to fill knowledge and skills gaps. Research by Gartner® finds that approximately 32% of organizations are replacing full-time employees with contingent workers as a cost-saving measure. For employers with limited budgets or lack of access to training resources, hiring locally or offshore offers a number of benefits:
- Cost-efficiency: Growing businesses need more office space, skilled employees and services. Outsourcing can offset operating costs by reducing the expenses associated with hiring and training.
- Agility: The expense required to stay up-to-date and train employees to learn and use new technology can be cost-prohibitive for many businesses. Outsourcing increases agility by decreasing capital expenditures.
- Continuity and security: Periods of high attrition can cause instability within business operations. Outsourcing provides a level of security and continuity while reducing the risk of losing critical personnel.
- Focus: Outsourcing reduces testing workload, creating more time for developers to focus on mission-critical deliverables.
Benefits of upskilling
Upskilling is the process of equipping existing employees with new competencies to bridge skills gaps. According to a 2019 paper from the World Economic Forum and Boston Consulting Group, upskilling an existing workforce comes at a price – approximately $24,800 per person in the United States (this includes start-up costs, along with training program implementations). Although upskilling can be a significant investment, the benefits are game-changing:
- Employee engagement and retention: Training better equips employees to handle complex tasks and take on new challenges. They become better contenders for promotions and, according to Forbes, are more likely to stick around long-term.
- Increased morale, loyalty, and motivation: Training offers employees a sense of recognition and boosts their confidence. Employees who receive training are also motivated to improve their performance.
- Succession planning: Upskilling can stabilize change management by empowering successors to step into leadership roles with the least disruption.
- Accelerated business growth: A CFO Research Services report finds that nearly all CFOs recognize the critical impact of human capital in key business areas such as driving customer satisfaction, product and service innovation, growth and overall profitability. With upskilling, leaders can train employees with the specific competencies and skills needed to scale their organizations.
The bottom line
In conclusion, both outsourcing and upskilling have benefits. Companies that outsource benefit from cost-efficiency, agility, and security. Businesses that upskill gain employee retention, business growth, and increased employee confidence. Companies can also choose to both upskill and outsource to receive the benefits of both. There is no one-size-fits-all solution. Employers will need to assess budget and funding, industry outlook, and internal pandemic implications to determine the best course of action for their business.
If you’re still unsure about whether to outsource or upskill, try our free assessment tool, then contact us for a consultation.
About the Author
Kimberley Whyte is an ISTQB® certified professional with more than three years of experience in Quality Assurance. She has spearheaded software testing efforts in companies small and large. Having a love for all things tech, Kimberley’s passion is to ensure that quality remains at the forefront of software systems and programs.