Whether nearshoring or offshoring, there has been growing popularity when it comes to outsourcing IT services. There are many different reasons that companies choose to do this. Some reasons could be cost control, more focus in a specific area, getting things done faster, to use up capital resources, and much more. There are also many options to consider when choosing how to outsource with the two most popular answer being offshoring and nearshoring. So how do you know which one to choose? Well, the answer really comes down to what you need. There are plenty of things to consider for both offshoring and nearshoring all of which we will cover below.
For those of you who don’t know nearshoring is a type of outsourcing where the work is done close to home. While some work still may be sent outside of the home country it usually goes to a similar place. By similar we are referring to culture, language, and time zone. Below we’ll go over some things for you to consider if you are thinking about nearshoring.
Nearshore outsourcing partners often share the same time zone as your business making it easier to have questions answered when you need them, or to clear up a misunderstanding quickly and efficiently. There is no lag time between responses which can be a real problem when working with partners in other time zones.
Depending on your location you may end up paying a lot more when it comes to labour costs as opposed to offshoring. This may or may not be a problem depending on how well funded you are.
Differences in culture and language seem to be less of an issue when it comes to nearshoring. This seems to be particularly true with countries that have people travelling back and forth between both frequently.
Your flexibility may be limited when you commit to nearshoring. This is mainly because you will have fewer providers to select and choose from. Once again this all comes down to your business and how it works.
Face-to-face meetings are a lot easier and will cost you a lot less money than with offshoring partners. This is definitely a pro for smaller businesses but should not really affect bigger businesses that have that kind of funding.
Another thing that seems to be a small problem is people overestimating the similarities between them and their overseas partners. Thinking that the culture is similar when it really isn’t might create problems later down the road.
If you haven’t guessed by now, offshoring is the outsourcing of IT work to more distant countries and just like nearshoring it has both its cons and pros, all of which you will have to take into consideration. Once you look at both pros and cons it is easier to come to a conclusive decision as to what would best suit your company and its needs.
One of the biggest and most well known pros is that the labor costs are significantly reduced. While in some countries, it may not be a huge difference it still makes a big difference in your funding. This is something that might become really useful to small business owners who just don’t have the resources to hire someone nearshoring.
A big risk when it comes to offshoring is how unstable some countries can become in an instant. Protests and wars can break out in no time at all bringing your business to a halt. These are all things you should seriously consider before putting your business in a country you may not know much about.
The difference in time zones can actually be quite productive. If you have people working on one project in one time zone then when the day comes to an end they can easily send it to someone else in another time zone. This ultimately means that someone can work on a project all around the clock.
Laws may not hold up as strongly in the country you are working with when compared to where you are located. While most countries may have the same laws they still might not provide you with enough protection against theft and malicious coding.
You can also be more flexible with your workforce when you are offshore outsourcing, meaning you can really ramp up the labor depending on your needs and your company’s needs at the time.
One of the biggest downfalls seems to be cultural and language difference which can really slow progress down as well as time zone differences. It can be harder to ask questions and solve problems together as well as making face-to-face meeting very expensive and time-consuming for both parties.