Many companies face the same problem when they want to expand to Poland. It is often a tough decision to choose between outsourcing to Poland or opening a subsidiary in Poland.
There are advantages and disadvantages to both options. In this blog post, we want to give five reasons why opening a subsidiary in Poland can be a better long-term strategy.
Let us start with the definition of outsourcing.
What is outsourcing?
Outsourcing defines as “obtaining goods or services from a third-party company rather than creating or developing them internally”.
Outsourcing can happen either within the same country or abroad. In the latter case, outsourcing is most commonly used in situations when there is a shortage of particular talent in the national market, or the costs of this labour are very high.
This practice is especially prevalent in the IT sector. Outsourcing happens when one company hires another company to take part in the software development process. This third-party company is the one who establishes work relationships with the professionals.
It sounds great. You do not employ staff, so the work relationships get more straightforward, and therefore you can reduce employment costs.
On the other hand, outsourcing can also have some disadvantages. Let’s list a couple of them.
Disadvantages of outsourcing
- Loss of control over the recruited professionals – You do not manage them directly so you might lose control over the work they perform.
- Potential hidden costs – Third-party companies might have some hidden fees or force you to sign lengthy contracts with them. Make sure you check the contract terms carefully.
- Risk of a security breach – As the professionals are not your employees, the risk of leakage of some security information is higher.
- Quality control issues – The outsourcing contractors might be more interested in financial benefits rather than in delivering outstanding quality.
- Communication issues – If you only communicate via e-mail, things can get misunderstood and lost in translation.
These are just a few reasons why you should watch out for outsourcing.
Let’s now have a look at five reasons why opening a subsidiary in Poland might be the better option.
Advantages of setting up a subsidiary in Poland
Keeping your core competencies and knowledge in-house
It might seem obvious, but you should never outsource anything that is your core competence. I.e. as a product developing company, you should be very careful about not outsourcing your R&D competencies.
The same goes for knowledge transfer. The question you need to ask yourself is how much knowledge you want to pass to the people who do not have a direct bond to your company.
Outsourcing contracts are usually limited in time. Do you, therefore, want to invest in their training to improve the quality of their work?
Better communication and business understanding
If you want to have a successful business that operates well in the long term, you need to make sure that your employees understand your operational model. You need to know that your employees identify themselves with your core values and are aware of what your customer expectations are.
Owning the company culture is much more difficult in an outsourced model. External teams usually do not identify themselves with your core values.
The better your employees understand your business, the better their deliverables are.
Lower costs of employees
This topic might be a bit tricky, but in most cases, the price of having someone on your payroll might be more cost-efficient than having an outsourced worker.
Let’s analyse the example of a senior IT specialist. In Warsaw, you can expect to pay around 15.000 PLN gross for a software developer or 200.000 PLN yearly.
Outsourcing the same specialist will cost you +/- 150 PLN per hour or around 275.000 PLN per year. The difference in cost is significant.
Consistent culture across your organisation
When recruiting, you can make sure that you ask the right questions that will allow you to choose people who fit in your organisational culture.
This practice allows you to keep a consistent culture across the company. It would also give a consistent brand image for the long term.
To strengthen the culture even further, you could also provide your employees with appropriate regular training. When it comes to outsourced employees, this becomes a little more complicated, since you’re more uncertain about their future in the project.
Recruitment of better and more loyal staff
Especially in Poland, people choose for stability. This preference is an essential factor when recruiting better professionals that are loyal and therefore stay for longer.
In addition to that, for many employees, career progress is essential. If you could provide them with an appropriate career ladder, you will tie them to your company for longer.
In outsourcing, it might not always be easy to recruit senior people. The reason for this is because they are usually quite expensive and not easy to get as they can choose from a wide variety of product companies.
If you need some help in setting up your subsidiary in Poland, do not hesitate and contact us. We are here to make things easier for you!
This is a guest post written by Dagmara Grabowiec. Dagmara is a Polish blogger who writes about Poland and Polish culture. Feel free to visit www.partnersontheroad.com to read more from her.