The newest type of outsourcing: why choose nearshoring
What exactly is nearshoring?
At bigger companies, it is a well-known practice not to carry out software development tasks in-house, but to outsource them to a dev company that has more knowledge or experience in the given field. Others (especially American companies) choose outsourcing because it would be impossible to complete a development process within the USA that has the same costs and quality. Outsourcing companies are usually software of web development enterprises, where there are a lot of professional developers.
There are three types of IT outsourcing:
This is the least widespread type. It means that the company outsources the given task to a team which is in the same country as the client. This can be useful for companies who (because of tight deadlines and work pace) cannot afford working with a development team in a different time zone.
When you hear the word outsourcing, most people probably have this type in mind. Offshore outsourcing means that the (usually bigger volume) projects are outsourced to a company that works for lower prices in a far-away country. The most popular places of this kind are China, India, and Malaysia.
There are a few problems with this type: languages and time zones are different – but most people still choose this version, because developers who work in these countries usually have lower hourly rates than those who are within the country.
There are few who know this type, and even fewer who choose it; however, it has more advantages than it seems. Nearshore outsourcing means that the developing company is in a neighboring or very nearby country. In the case of the USA, popular nearshore countries are Mexico and other Central and South American countries. In Europe, more and more Western companies turn to Eastern European countries with their projects.
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"Do what you do best and outsource the rest." said Peter Drucker, the famous Austrian-born American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business corporation. And he was right.
Why nearshoring is good for the outsourcing company
Nearshoring has quite a number of advantages that helps the client be finished with the development tasks on time, within the budget and with efficient collaboration. Meanwhile, the outsourcing company doesn’t have to worry about developing, but they can work on their own internal projects.
The companies that turn to outsourcing usually do this because they can save a significant amount of money. However, despite the common misconceptions, the hourly rate of developers is lower in not only countries in the Far East. The outsourcing company can also save on development costs by working with teams in Latin American and Eastern Europe, because prices are also lower in these countries.
However, there are a lot of companies which do not trust these low rates, because they associate it with worse quality. In the case of nearshoring, you don’t have to be afraid of that because of the common language and culture. Plus, life is generally cheaper in these countries than that of the outsourcing company. So you can go ahead and choose nearshoring without having to be worried about quality.
In the case of nearshoring, there is another reason why you don’t need to worry about bad quality work, and that is the developer team itself. Eastern European countries put great emphasis on the university or college tuition of IT professionals. The profession is getting more and more attention and respect, so institutions put a lot of money and effort into courses related to IT. Since the area provides a lot of opportunities to grow and build a career, more and more young people are choosing it as their profession.
Few cultural or language barriers
By choosing a neighboring country to outsource your development project to, you save yourself from a lot of inconvenience (as opposed to a country which is far away from you both physically and culturally). IT courses in most countries come with compulsory English tuition, so the major managers and project managers will probably understand your requests.
Besides the common language, common culture is more important than you think. Most Latin American and Eastern European countries have a similar “Western” culture to the actual outsourcing company. Plus, because of the physical proximity, the development team probably knows more about the culture, everyday life and current events of the country the outsourcing company is in than a team from an Asian country.
No difference in time zones
At first sight this does not seem as big of an advantage, either, because all you have to do is outsource development tasks – and far-away developers can do that when it’s night time in your country, right?
However, people keep forgetting about the fact that a big project is usually constructed by more than one step; and you have to communicate about these steps with the developers and project managers in the other country. If you’re in the same time zone as your dev team, that means that your working hours are also similar (sometimes with even not any difference whatsoever). So you don’t have to send long e-mails about when to meet, and you certainly don’t have to have a meeting at night if there is a problem or just a simple meeting of the two parties.
No more long flights
If you have to meet face to face, the development team is no further away than a few-hour-long flight, and travel costs are much lower, too. Besides that, you probably don’t need special documents or visas if one of the teams must visit the other location.
Many people still think that outsourcing means offshore development only. However, it is worth it to consider nearshoring as well. This solution, besides enabling you to save a significant amount of money, you have advantages which make your everyday work and communication with developers much easier.