Why choosing the cheapest offshore option could be a mistake for digital agency owners

Ever snagged a deal that seemed too good to be true, only to face a slew of issues later? 

We’ve all been there, right? 

It’s like booking the most affordable hotel for your much-needed vacation, only to find out it’s miles away from any attractions and the “sea view” room overlooks a parking lot. 

Now, consider how this analogy applies to your business decisions, where the outcomes are even more crucial.

Initially, choosing the cheapest offshore service can seem like a smart move, especially when budgets are tight. However, effective offshore agency selection is crucial to avoid the pitfalls of a seemingly good deal that is less than ideal.

Why? 

Cutting corners can mean unexpected troubles, which we’ll explore throughout this blog. Stick with us as we reveal the hidden costs and how to avoid falling into the trap of enticing yet ultimately costly cheap offers.

Risks of choosing the cheapest offshore digital services

Inadequate Deliverables

When a vendor underquotes, they may not fully understand the scope and complexity of your project. This misunderstanding can lead to deliverables that don’t meet your needs or your clients’ needs. The result? You might end up spending additional time and money on revisions and enhancements that should have been unnecessary. These are just some of the hidden costs of low-cost offshore outsourcing.

Lack of Expertise

Cheaper bids often come from vendors who lack the requisite skills or experience. This lack of expertise means they might struggle with more complex aspects of your project, leading to substandard work that fails to meet industry standards or your client’s expectations.

Project Delays

Lower-cost vendors often overcommit to multiple projects to compensate for their lower rates, spreading their resources too thin. This juggling act can lead to significant delays in your project timelines, affecting your planning and potentially causing you to miss critical market opportunities.

Compromised Security

To cut costs, some vendors might skimp on important security measures. For digital agencies, where data integrity and security are paramount, this can lead to vulnerabilities, risking your and your client’s sensitive information.

Communication Breakdowns

Budget constraints can also mean less investment in proper project management, communication tools, and practices. Poor communication can lead to misunderstandings, misaligned goals, and a project outcome that doesn’t align with your vision.

Scalability Issues

Cheap options might provide a solution that works for now but doesn’t consider your future needs. When your project needs to scale, you may find the initial setup insufficient without costly modifications or even complete overhauls.

These are just some of the hidden costs of low-cost offshore outsourcing. Effective offshore agency selection requires a careful balance of cost and quality, ensuring that the long-term success of your projects isn’t compromised by short-term savings. 

Immediate vs. Long-Term Costs

Who doesn’t want to save money, right? But here’s the catch: lower initial costs often don’t equate to lower overall costs. In fact, they frequently lead to greater expenses down the line. For instance, a study by the Project Management Institute found that 45% of projects that cut initial costs experienced overruns, leading to a 27% higher total cost than originally planned.

These overruns typically arise when choosing the cheapest offshore option. Lower-priced vendors may cut corners, use less qualified staff, or underestimate the required resources—factors that contribute to additional costs later.

Cost Comparison of Project Delays and Overruns

Let’s look at some numbers to give you a clearer picture. Here’s a table comparing the average cost implications of project delays and overruns between vendors who offer the lowest bids and those who propose reasonable, market-aligned prices.

Cost Factor	Lower-Priced Vendor	Reasonably Priced Vendor
Average Project Overrun Cost	$120,000	$50,000
Delay Penalties	$30,000	$5,000
Additional Staffing Needs	$25,000	$10,000
Total Cost	$175,000	$65,000

How You Could Pay More in the Long Run: Offshore Agency Selection Examples to Consider

Imagine you’re launching a new website. The cheapest option might initially cost 20% less, but what if the site isn’t optimized correctly, leading to poor user experience and lower sales? Or consider a software development project where insufficient testing results in buggy releases. The costs of fixing these issues, not to mention the damage to your client relationships, can far exceed the amount you saved.

In both scenarios, the seemingly small upfront savings can lead to significant financial losses, making the cheap option ultimately more expensive.

How You Can Evaluate Vendor Capabilities

Selecting the right offshore service provider for digital agency outsourcing involves much more than comparing price tags. It’s about understanding how well a vendor can meet your specific needs and contribute to your agency’s long-term success.

Here are essential criteria to consider when evaluating potential vendors:

Understanding of Goals

• Identify Vendors Who Understand Your Vision: Choose vendors that demonstrate a clear understanding of your agency’s vision and objectives.
• Assess Proactiveness: Look for vendors who ask insightful questions and suggest proactive solutions.
• Check for Alignment: Ensure the vendor’s solutions and strategies align with your agency’s standards and expectations.

Communication

• Assess Communication Channels: Verify that the vendor uses effective and clear communication channels suitable for your team.
• Evaluate Frequency of Updates: Ensure the vendor provides regular updates and progress reports at intervals that match your project management needs.
• Check for Transparency: Look for vendors who are transparent about project statuses, challenges, and changes.
• Assess Responsiveness: Make sure the vendor is responsive to inquiries and feedback throughout the project lifecycle.

Realistic Timelines

• Avoid Unrealistic Promises: Steer clear of vendors who promise excessively fast turnarounds that could compromise quality.
• Evaluate Project Planning: Look for vendors that provide realistic, well-structured timelines allowing for thorough testing and revisions.
• Assess Final Product Quality: Ensure the vendor’s timelines contribute to delivering polished and market-ready products.

Quality of Work

• Request Testimonials or References: Despite confidentiality limits, ask for testimonials or references to evaluate the vendor’s quality of work.
• Assess Quality Across Various Projects: Verify the vendor’s ability to maintain high standards in different project types and complexities.

Scalability and Flexibility

• Evaluate Adaptability: Check if the vendor can adapt to changing project scopes and requirements as your agency grows.
• Assess Scalability: Ensure the vendor can scale operations effectively to meet increasing demands.

Technical Expertise and Support

• Verify Technical Proficiency: Evaluate the vendor’s expertise in specific technologies and platforms required for your projects.
• Assess Support Level: Consider the comprehensiveness of the vendor’s support throughout the project lifecycle.
• Check Proactiveness in Issue Resolution: Ensure the vendor is proactive in addressing potential issues before they escalate.

Responsiveness

• Measure Response Times: Evaluate how quickly the vendor responds to emails, calls, and urgent requests.
• Assess Availability: Check if the vendor is available during your working hours and for emergency support if needed.

Accountability

• Establish Clear Accountability: Ensure there are clear points of contact who are accountable for different aspects of the projects.
• Track Performance Metrics: Set up key performance indicators (KPIs) that the vendor must meet, ensuring accountability for results.

Collaboration

• Assess Team Integration: Evaluate how well the vendor’s team can integrate with your own team for collaborative projects.
• Collaboration Tools: Ensure the vendor is proficient with the collaboration tools that your team uses, facilitating smoother project management.
• Evaluate Communication Styles: Ensure the vendor’s communication style matches yours to facilitate effective interaction.
• Check for Compatible Work Ethics: Verify that the vendor’s work ethic aligns with your agency’s.
• Assess Company Values: Make sure the vendor’s company values harmonize with yours to enhance collaboration and project execution.

By taking the time to assess these capabilities, you engage in thoughtful offshore vendor selection. This approach is central to understanding how to avoid cheap offshore outsourcing mistakes. It ensures that you’re saving money upfront and investing in a partnership that aligns with your long-term success and quality standards.

Unsure how to manage offshore agency selection to find a reliable partner?

At TogetherWeShip, we embody the principles we advocate. With a track record of supporting over 200 agencies, our processes are not just proven; they are perfected. Our approach has been honed through direct collaboration with more than 100 clients, ensuring an effective and tested methodology.

Why choose us?

• Quick, Easy, and No-Cost Onboarding: Get started without any upfront fees.
• Experienced Senior Resources: All our staff have at least five years of professional experience.
• Transparent Billing: No invoices are issued without timesheet approval, ensuring you only pay for what you agree to.
• Timezone Flexibility: We work according to your schedule, making communication seamless.
• Regular Updates: Weekly meetings with project managers keep you informed and engaged with your project’s progress.
• Flexible Engagement Models: There is no minimum contract term, allowing you to scale up or down as needed.

At TogetherWeShip, we’re not just a service provider; we’re your partner in growth. Let us help you navigate the complexities of outsourcing with ease and confidence.