Advantages and Disadvantages of Nearshore Outsourcing

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Advantages and Disadvantages of Nearshore Outsourcing

Introduction

Outsourcing is a way in which companies hire top-tier talent to get their work done.  With the option of outsourcing open, they don’t have to limit themselves to local talent, but instead consider the skills and talents of people located not only in nearby countries, but half way across the world too. There are two types of outsourcing: offshore outsourcing and nearshore outsourcing. Since outsourcing is done primarily for IT related works, you will find that software developers are in great demand when compared to other jobs.

While many companies prefer to delegate tasks to talents in their own country, many of them prefer to try out the nearshore and offshore outsourcing options. You might always be aware of the differences between the two. While nearshore outsourcing is all about delegating tasks in neighbouring countries, offshore outsourcing is all about finding and hiring talent in a totally different country where the culture might be different, the time zone might be different, among other differences that are present. 

In this article, the focus is on nearshore outsourcing. We will talk about the advantages and disadvantages of nearshore outsourcing, and based on this, you can decide which would be best for you.

What is nearshore outsourcing? 

When companies utilise the facilities and resources of a neighbouring country, including their teams and infrastructure,  it is called nearshore outsourcing. The time zones will be the same, the culture will be the same, and even the rates for the developers and analysts will almost be the same, if only cheaper. So when you delegate tasks to the nearshore team, you can communicate with them on the same time zones as yours, and work seamlessly without any loss of time. You can integrate the nearshore team into your team seamlessly.

The geographical proximity makes it possible to fly down to them to visit the team anytime the company needs to discuss critical details of the project. Your team might be working on the project in your company, and the other team might be working on a different part of the same project, and the work moves faster.

If you are not keen on offshore outsourcing, especially when you feel the distance is too far, and that the team requires extensive training to understand your project, then you can easily opt for the nearshore outsourcing option. This way you can dip your toes in a new kind of working system, and still be relieved that the project hasn’t moved too far away from your home country. 

The benefits of nearshore outsourcing

Check out the various benefits of nearshore outsourcing:

Time Zone advantages

Since the time zone will be similar, you can heave a huge sigh of relief there. That was something companies found difficult with offshore outsourcing because the team will be half-way across the country so by the time their working hours end, yours will start. Though many companies in the countries where the work is outsourced have shifted their work hours to accommodate the employer company, there still could be problems. It could be difficult when you have daily meetings and project tracking. 

Cost savings

There is some amount of cost savings when you delegate tasks to a neighbouring country. However, you should be aware of the developer rates in these countries. For example, if you are hiring developers from Latin America, you might have to pay $61 per hour, or $58 per hour if you are hiring developers from Eastern Europe. So it depends on where you are getting your developers from. The cost savings factor will depend on which country you are hiring the developers from. 

Explore the talents in other countries

When you are looking to develop a software development team for your new project, you can look beyond your country with nearshore outsourcing. You can explore the talents from Latin America, Western Europe or Eastern Europe and do a screening to know how they would suit your project requirements. Once the project is completed, you can retain them for upgrades and bug fixes on the standby. The team from your own company must work in collaboration with them, so this would be a great way to diversify your own team’s skills and test new ideas as well. 

Infrastructure will be updated regularly

When you partner with a software development company, they will definitely upgrade their own software and other resources required to complete each project. This way you don’t have to invest in upgrading your own technology, especially since you have this very feasible option. When you outsource the project, you can definitely make use of this facility at a much lower cost. Remain competitive in the market with the best technologies by collaborating with the best outsourcing team. 

Why nearshore outsourcing may not be good?

While this option does have multiple benefits, there are some disadvantages that you need to consider. Check them out:

Fewer options

With nearshore outsourcing, you might have very limited options with talented developers, since you get to explore the options available at offshore outsourcing as well. With luck, you might be able to find the right team, but still you are missing out on options that are available in other countries.

When the company has secrets that they don’t want to reveal

The company might have some trade secrets that they don’t wish to divulge to outside people, and when an external team comes in on a temporary basis, they might feel a little discomfort in sharing their company’s secrets, for fear of it falling into the wrong hands. So what most companies do in such cases would be to delegate small tasks, instead of the full processes. 

Could still be expensive

If budget is a serious consideration for outsourcing, then nearshore outsourcing may not be the right answer. It might still be expensive enough when compared to offshore outsourcing. The rates in India, China, Ukraine, Philippines, etc are all much cheaper when compared to the countries in the European region. So if you are looking for really cheap rates then you might have to look beyond the neighbouring countries. 

Conclusion

If you are considering the nearshore route, then reading the blog would help you understand the pros and cons, and then make a decision based on your project requirements and budget. The concept of remote working has had companies explore options beyond their home country, and business leaders look for the best talent pool in other countries. It is obvious that with nearshore outsourcing, you can combine the best of both worlds, especially with cultural similarities and proximity, and even with the cost factor, you can negotiate and reach a solution that’s acceptable to all. 

Interesting Links:

The major mistakes while opting for Software Development Outsourcing

More information about Nearshore Outsourcing

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