Nearshore Outsourcing: What Is It and How Do You Use It?
Companies from the US, Europe, Australia choose to hire companies nearshore and pass a lot of business processes to them. It saves time for another tasks in company and can cut budget significantly and to find a team that is experienced in you process and can provide best services.
What Is Nearshore Outsourcing?
Nearshore outsourcing is a process of delegating some tasks, in particular software development, business process, tasks to companies in neighbouring countries to get better control over operational expenditures. Other benefits of nearshoring are cultural proximity, convenient location and time zones, same or similar language. Argentina or Mexico is a nearshore country for The USA and Ukraine is nearshore destination for Western Europe countries (Sweden, Norway, Finland, Germany, United Kingdom, Denmark, Netherlands) and the Middle East (Israel, UAE).
Some companies outsource to nearshore zone countries withe the idea of cutting the distances and the convenient time-zone overlaps.
They shifted work to organizations within their own regions, still allowing them to save costs and/or find resources for tasks that couldn’t be handled in-house.
With transportation and technologies developing rapidly, the world is becoming smaller every day. This makes the so-called offshore outsourcing – sending IT-related work anywhere in the world – possible. Though, soon enough, management problems, cultural differences, and time-zone issues started emerging, causing headaches and, in some cases, interfering with business. But there is a solution to these problems, and it is called nearshore outsourcing.
This is how the nearshore software development services appeared.
What Is the Difference Between Nearshore and Offshore Services?
The primary function of offshore development is to save money while hiring first-class engineers and developers in other countries.
With sufficient care, an offshore team will give you a quality product and will cut your expenditures and time.
Costs and quality of engineers are the only major factors that determine offshore development. For the most of the cases, offshore companies may be located in another part of the world. For the US, a good example of an offshore is Ukraine, for Germany, it will be Mexico.
Nearshore software development pays more significance to a closer location and lesser language difference for the reasons described above. A great example of a nearshore country for the States will be Mexico, the same role Ukraine plays for Germany. There are some cases when the time difference is quite bigger than in these examples. That said, for Australia or New Zealand the best location is Malaysia: although it is quite farther than, say, Ukraine from Germany, it is still much closer than any other country with a big pool of cheaper experienced developers.
Offshore vs Nearshore. What Should I Choose?
Your preferable choice should depend on the complexity and its depth of occurrence.
If you have a straightforward and easy everyday use application in development, you can easily go with an offshore team. Offshore are also good for really limited budgets, but, once more, you should pay extra attention to the quality and constantly check if everything goes right with your project.
Nearshore outsourcing allows you to have a close dedicated team which will let you more control over your project development flow, more engagement with the team and less possible problem points thanks to faster reaction time.
This makes it better for parts of large projects, or even expanding your in-house team, both in temporary or long-term manner.
What Are the Benefits of Nearshoring?
- Geographical proximity
If a project requires personal meetings during its lifecycle, travel costs for you or your project manager can be a way lower than with offshore development.
Usually, distances between the main development hubs and nearshore markets are covered by direct airlines, so in some cases, it also means traveling directly to and from a meeting which won’t require a hotel stay.
- Fewer (or no) time-zone differences
With nearshore outsourcing, partnering companies are usually located in the same or the nearest timezone, which maximizes the amount of time you can spend on efficient communication throughout the workday.
The 1-hour difference gets you a 7-hour window for a comfortable communication allowing you to answer all possible questions regarding the project right away.
- Cost savings
Almost instant communication saves a big part of the budget compared to offshore, when developers may lose paid time on waiting for your response, task management, research, or working the wrong way and then doing the work once more after you notice a problem.
Fast and easy travel to the neighboring countries will also save money on tickets, as there are probably lots of competing transport companies that dump the ticket costs.
- Cultural and language similarities
Similar language and culture are playing a considerable role in the nearshore software development process, as it simplifies and speeds up the process.
If you and your nearshore outsourcing company speak the common language, you communication process may be faster and clearer than that in English, even if you both have a great English proficiency.
Similar culture will probably intend the same bank holidays and absence of situations when your project delays for partner’s holiday, and one week later — for yours.
- Compensation of staff shortages
Nearshore software development companies are the best option to augment your team in case of staff shortage, as engineers from those are used to the project-based work and flexible enough to dive in a new project with all due quality standards.
This process will be naturally faster and easier with nearshore outsourcing due to the same language and cultural similarity described above.
- Improving company efficiency through load distribution to outsourcing companies
If your company has a giant software product in development, you can outsource its different integral parts to a nearshore software development studio and rearrange your core team for principal tasks.
These hired teams will work as sub-teams of your large project to some extent and will add flexibility to your development process.
How to Make the Most of Nearshore Outsourcing?
Having addressed the question “what is nearshoring,” it’s essential to understand how to make the most out of it. Here are three tips from Qubit Labs that will help your company benefit from nearshoring:
1. Evaluate your tasks and divide them into categories depending on their complexity
There are certain project phases or other activities that require more time and effort than others. Due to them, companies often experience delays and slowdowns. As per Fortunly, 52% of small businesses will continue to outsource their non-core functions even in the post-pandemic economy.
Speaking of small businesses, around 37% use near shore development to handle at least one of their business processes. Most often, companies outsource IT operations (37%), accounting (37%), or digital market responsibilities (34%).
Nearshore outsourcing allows for increased business efficiency by making them more flexible, giving more free time to the employees, and ensuring expert assistance.
You can invest saved time and finances into further growth once you transfer the most cumbersome and tedious tasks to remote companies.
2. Ponder the feasibility of nearshoring
Since you’re already aware of the nearshore zone definition, it’s clear there will be no problems regarding timely communication with your partner. Nevertheless, it still implies working with new people and adding another entity to your team.
Nobody’s canceled onboarding and time required for adaptation, so you’ll need someone to manage these processes. It’s necessary to have a reliable point of contact with your nearshoring vendor. Such an employee will be responsible for tracking the vendor’s performance and checking whether the delivered results meet the requirements.
When being sure about your decision to outsource, it’s essential to compare nearshore vs offshore to understand which option is more suitable in your case.
If you’re not sure which alternative is more efficient, you can combine them. Say you have a US-based company that wants to facilitate its performance and accelerate processes. This being so, you can hire offshore developers in Ukraine and nearshore to other countries of the Eastern European region.
Such a solution enables increased productivity because both your teams will work simultaneously when your in-house employees have their time off.
3. Establish and promote trust
The nearshoring definition implies transparency in all processes. When your remote team is aware of your organization’s goals, structure, capacity, target audience, and core tasks, it is more likely to come up with high-quality results.
When it comes to choosing a nearshoring partner, make sure to check other clients’ reviews and ask the vendor about its hiring approaches, the information it provides to the customers, and the way it manages internal processes.
Also, it’s essential to define nearshore company’s transparency and emphasize that you prefer complete visibility. Such an approach allows for choosing the developers yourself, being sure that their skills align with your requirements, and closely monitoring all the processes, being able to introduce changes the moment any issues arise.
What Do You Have to Consider When Outsourcing?
As any tool, nearshore outsourcing can be extremely beneficial for a company, but only if used wisely. When choosing a location, companies should research the level of employee training in the country of interest, it’s laws and level of intellectual property security.
Knowing the country’s general economics, and the prospective partner’s experience, manpower and technological understanding is of advantage too. And Qubit Labs as a nearshore development company knows everything about it. We are the go-to team in your search for a reliable outsourcing destination that will guarantee your company’s success.
The high level of IT-specialists and openness to cooperation, for example, made Eastern Europe, and Ukraine in particular, such an attractive near-shoring destination for the Western European businesses.
If you too are considering Ukraine as destination, you get informed on all of the above just by reading our article.
Benefits for Your Company
Benefits like lower operating and traveling costs are pretty obvious, but is this an enough reason to choose nearshore services?
Nearshoring also allows your company to take on more work and either delegate whole projects to workers in countries with substantially lower wages, or delegate only the most tedious tasks, while assigning the important projects to the in-house specialists.
And while you significantly lower costs, you still retain good control, high responsiveness and, having correctly chosen the location in a neighboring country, a team that will understand your market.
Also, by choosing a company closer to home, you make business faster, as you avoid time-zone differences.
This also translates into better quality and motivation, since the workers are more likely to be awake and alert and don’t have to adjust their schedules to another country’s hours of business.
If we sparked your interest in the topic, here’s an interesting read – Offshore Team 101 by Iva Kozlovska.
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