The global IT outsourcing industry is a huge one - being worth a hundred billion dollars, it connects clients in North America, Europe and Asia with skilled developers, designers as well as engineers across evolving markets across the world. While outsourcing creates efficiency and cost benefits, the challenge of cross border payments always stands in the way as a complex connection for these industries to be able to operate together. In IT outsourcing, payments play an important part as project deadlines do. Any sort of payment friction does not only hurt vendor cash flows but also plays a role in damaging trust and reliance eventually leading to a strain between clients and service providers. Modern fintech solutions like TransFi are solving this problem by enabling instant payments which are curated with utmost security and transparency. Before getting into these details, let’s first understand, through this article, how the industry and its rails operate. 

Current state of Cross border payments in IT Outsourcing 

Outsourcing relies on seamless financial flows spread across clients and vendors’ networks operating in different geographical locations. These payment systems cover;

1. Monthly retainers for development teams and setups.

2. Milestone based project invoices for project specific works.

3. Recurring Saas outsourcing payments for regulated IT services.

4. Payroll outsourcing for global workforce and remote employees. 

While these systems seem to have worked for years, the rails underlying these payments are outdated, slow and inefficient including bank transfers, SWIFT wire transfers and manual remittance systems. These rails are not the most reliable forms of fund movement in the current scenario. 

How payment delays cause distrust in IT outsourcing 

1. Cash flow disruption - outsourced IT vendors rely on timely payments in order to cover salaries, utilities, tools and infrastructure. A considerable delay can mean payroll issues and can cost reliability. 

2. Erosion of reliability - if the delivery of projects from clients happens on time but payments don’t arrive with the same contracts, vendors question commitment and overall reliability. 

3. Operational risks - losses due to exchange rates, unexpected intermediary bank fees and settlement status issues create uncertainty and induce gaps in operation pipelines. 

4. Vendor retention issues - if the payment related issues persist, there are high chances of dropping clients and sidelining of associated clients. 

5. Damage of reputation - for Saas companies outsourcing IT, delayed payments cause direct harm to the credibility among competitors. 

Common payment challenges in IT outsourcing 

1. SWIFT transfer delays - these transfers take 2-5 business days and cost high fees.

2. Bank cut off times - weekends and holidays, unaligned payment schedules together stall transfer timings.

3. Regulatory bottlenecks - cross border compliances add friction to the payment pipelines. 

4. Manual processes - spreadsheets for records, email approvals, batch uploads and other manual processes delay payouts.

5. Lack of transparency - vendors don’t have the access to transparent data relating to their payments and associated costs which generally lead to significant deductions.  

The Shift towards instant payments and its domino effect 

To solve these challenges faced by the industry, the systems are moving towards;

1. Payment APIs - APIs help automating payouts directly from the platforms. 

2. Instant settlement rails - usage of local clearing systems help in real time connectivity and transfers.

3. Digital wallets - wallets are flipping the market as they allow instant transfers, withdrawals and safe movement of money.

4. Stablecoin and crypto payouts - these are faster, borderless alternatives for global payouts, securely and quickly. 

This evolution has in turn increased innovative digital adoption, has helped reduce costs, improved trust and streamlined operations. 

How TransFi APIs Solve Cross-Border IT Outsourcing Payment Delays

TransFi provides an API first infrastructure for global IT service payments improving automation, speed and security. Key advantages of TransFi include;

1. Instant Cross border settlements

• It enables movement of funds within seconds let alone hours.
• Vendors in local and global markets get paid instantly via local rail network connections. 

2. Payment automation 

• The system enables the automation of any kind of recurring payments like vendor payrolls, milestone payouts and Saas outsourcing subscriptions. 
• This eliminates any manual procedure timings and is directly replaced by real time API payments.

3. Transparency in fee structure and low costs

• These transactions don’t correlate to any hidden costs and deductions or intermediary bank fees.
• The system is blockchain based - fully visible to both clients and vendors. 

4. Scalable API integration

• Easy integration into Saas platforms as well as other tools.
• It supports bulk payments, multiple vendor payments or small size payments across the globe.

5. Multi rail support 

• The system is equipped with bank transfers, digital wallets and stablecoin and digital currency payouts as well.
• The flexibility of the methods of payment remains in the hands of the vendor and the receiver. 

TransFi is helping many companies across industries in the global realm embrace a better future with the ease of the best services and interface at power by connecting users with over 100+ currencies, 250+ local payment methods, and 80+ digital assets, giving both senders and receivers control, speed, and cost savings. To explore tailored cross border payment solutions for IT outsourcing, get in touch with the expert team at TransFi expect the best resolutions at the earliest!   

To know more, also read: Payment delays in SaaS: Hidden costs for global growth & how to fix them

Frequently asked questions (FAQs)

1. What are the main challenges in cross border payments faced by IT outsourcing industries?  

These payments often consist of delays, high fees and lack of transparency in operations. 

2. How are API integrations helping the payment rails?

APIs help automating payouts directly from the platforms. It supports bulk payments, multiple vendor payments or small size payments across the globe.

3. How can vendors instantly pay using TransFi? 

TransFi enables movement of funds within seconds let alone hours. Vendors in local and global markets get paid instantly via local rail network connections. 

4. How can one connect TransFi for outsourcing payments?

It can be connected easily via TransFi’s API and minimal developmental input. 

5. How does TransFi support multi rail channels?
   The system is equipped with bank transfers, digital wallets and stablecoin and digital currency payouts as well. The flexibility of the methods of payment remains in the hands of the vendor and the receiver.