- 1 Outsourcing 101: A Quick Glance
- 2 IT Outsourcing: A Competitive Landscape
- 3 The Evolution Of Outsourcing
- 4 Why Do Companies Outsource?
- 5 Nearshore Or Offshore Outsourcing?
- 6 Nearshore Development Services
- 7 Why Choose A Nearshore Software Company?
- 8 The Advantages Of Nearshore Outsourcing Services
- 9 The Challenges Of Nearshore Outsourcing
- 10 Looking For Long-Term Success?
Outsourcing IT services is not a new methodology and has been around for quite some time. However, as technology evolves, so do these solutions offering more competitive options for companies. Among the staffing options, nearshore outsourcing stands out from the rest. And today, we’ll help you figure out why, and explain why most companies are shifting to this hiring alternative worldwide.
If you are a smart and savvy business owner, you perhaps are constantly looking for new ways to optimize your budget while getting the best results. However, we can’t deny this is a challenging venture for every company, mostly with the global economic turbulence we are experiencing these days. Software outsourcing comes as a solution to optimizing expenses, while allowing to explore a wider talent pool beyond the country the company is based.
Nearshore staffing is one of the most preferred options when hiring remote software development teams because it encompasses more benefits than other methodologies. Of course, the process also involves certain complexities that we’ll try to unpack in this complete guide to nearshore outsourcing services, but it’s a great tool to boost your company’s efficiency and productivity.
Outsourcing 101: A Quick Glance
It’s a fact that in-house staffing offers limited options when it comes to assembling a software development team. As a result, more and more companies are open to outsourcing talent every day, delegating important projects to nearshore software centers. The main reason? Well, according to a Deloitte Global Outsourcing Survey performed in 2020, cost reduction is the prevalent factor.
With the current economic bumps and the recession consequence of the pandemic that occurred two years ago, corporations strive to cut costs without losing productivity or efficiency. But at the same time, with all the constant technology improvements, software developers are in high demand, and companies want only the best talent.
IT Outsourcing: A Competitive Landscape
In this hunt, the cost/benefit relation comes into play, making outsourcing a complex process. As we mentioned, technology is constantly evolving, and outsourcing follows the same path, leading to a wide range of solutions for staff augmentation abroad.
Today, communications are easier and faster and, of course, cheaper than decades ago, allowing companies to hire developers outside their home countries. Nearshore outsourcing comes as the smartest solution, but what is it exactly? A nearshore software company is based within your company’s region and time zone. In some cases, it can be 1 time zone of difference.
However, let’s go back in time for a moment to understand how outsourcing emerged and led us to where we are today.
The Evolution Of Outsourcing
Though this staffing practice was born around the 18th century during the industrial revolution, it wasn’t until the 80s that companies started to look at it with keen eyes. This strategy allowed companies to reorganize their structures to make their operations more efficient, maximizing their profits.
However, in the beginning, outsourcing was more oriented toward manufacturing and industrial processes. It wasn’t until the end of the 90s decade that organizations started to outsource more strategic business positions like IT services. But, this evolution also came with specialized services known as offshoring, nearshoring, and onshoring. Let’s see how they work in more detail.
Why Do Companies Outsource?
Outsourcing is a powerful tool that allows companies to delegate specific processes to a third party for long or short-term contracts. By doing this, business leaders can focus on optimizing costs, increasing revenue, and increasing the opportunities to scale the company.
In fact, according to a report by Clutch, 90% of small businesses are planning to outsource in 2022, against 80% in 2021. The main reasons behind this are saving time, growing their companies, and working with skilled experts. So, outsourcing is not only for big corporations but also for smaller businesses that found in this resource a way to scale faster.
Nearshore Or Offshore Outsourcing?
Now, you probably have decided to go for software outsourcing, but you face another challenge: which type of outsourcing works best? You must first understand what lies behind the curtain to make the best decision. Because in the end, your choice will determine the impact on your business growth and productivity.
This is the option that is closest to your company’s headquarters. Unfortunately, on-shore outsourcing searches for talent locally, narrowing the possibilities and limiting your chances of getting highly skilled professionals. This doesn’t mean you can’t find qualified talent at home though, but you’ll probably miss the opportunity to deal with a proficient team with the technologies your projects demand.
Of course, you count on the advantage of having staff that speaks your language, but on the other hand, you’ll be paying a higher cost for it. This is because on-shore developers hiring costs are usually higher than nearshore or offshore options.
Hiring staff offshore is also a widespread practice but brings attached some challenges. This methodology enables companies to outsource talent from anywhere in the world regardless of time zones and locations.
However, though it’s cost-efficient, having remote staff not aligned in a similar time zone can lead to communication breakdowns and, consequently, a flawed project. But one thing is worth mentioning: you access a global talent pool increasing your chances of getting top-notch professionals onboard with lower costs.
Nearshore Development Services
Nearshore solutions entail all those services hired within the same region and time zone (or with minimal differences) of the company’s headquarters. This type of outsourcing bridges the gap between the on-shore and offshore methodologies. You get a team located close to your business, in the same continent, region, or even in a neighboring country.
Therefore, teams are more aligned with your in-house staff, and communication flows, increasing productivity and response times. Nearshore outsourcing is clearly the best of both worlds: on-shore and offshore. A win-win option for every company regardless of its size.
Why Choose A Nearshore Software Company?
Transferring business operations to a third party using a nearshore firm is a crucial decision in the lifecycle of any company. Therefore, you must carefully analyze each and every factor involved to guarantee the best outcome and seamless integration.
Software development is evolving with new technologies arising. In this context, developers are more specialized in different niches offering companies top-performing talent for specific projects.
Nearshore outsourcing is trending, and corporations that embrace the digital era are shifting to this methodology. But every coin has two sides, and software outsourcing has advantages and drawbacks too. By understanding this, you’ll have a clearer picture of how nearshore staffing works and whether it’s the right option for your business.
The Advantages Of Nearshore Outsourcing Services
Let’s drill down the benefits of nearshore technology services first. This is how your business can benefit when hiring remote talent nearby.
Yes. We have emphasized this a lot through the article because it’s the number one reason why companies of all sizes opt for nearshore solutions. Whether your business is on a budget or not, the main goal is to optimize expenses and skyrocket revenue.
Outsourcing allows you to avoid costly hiring and training processes, rent office space, and, what’s more, provide the team with the required hardware and software. Moreover, salaries in certain regions are more competitive as some countries have lower wages. As an example, nearshore America’s talent gives US companies the possibility to access qualified developers with great salaries, which, still, are lower than those offered domestically.
Geographical proximity is a great advantage of nearshore outsourcing compared to the widely known offshore methodology. Still, hiring a company offshore is much cheaper than a nearshore, but nothing beats a strategic location.
For example, you can have in-person meetings to supervise and make adjustments to the project development within a short distance from the nearshore software center. Saving time on traveling will give you more time to focus on your business. Plus, meeting your team will be easier, and your company will have more control over the tasks and the team’s performance.
- No Cultural Frictions
One of the biggest challenges companies used to face when outsourcing software offshore was the cultural differences. At first glance, many think it won’t have a direct impact on the outcome, but it certainly does. Just think about the cultural differences between a US company with outsourced teams in India.
Though India is one of the leading countries in the IT sector, they have distinct methodologies and also their own cultural values. This doesn’t mean it’s not possible to outsource your teams to such countries, but it will make your company face more considerable hurdles. Nearshore outsourcing definitely closes that cultural gap with a team aligned with your company’s culture.
- Similar Time Zones
Along with geographical proximity is the time zone alignment benefit. Unlike offshore companies, a nearshore software company is usually located within the same time zone as your headquarters or perhaps has a minimum difference.
Having your software outsourcing team working aligned with your regular business operating hours is great for reducing communication times when you need to get in touch with your team for any inquiry or adjustment to the project. Imagine running your business during the day and having to connect with the offshore team when you should be sleeping.
Nearshore solutions provide time zone compatibility to improve, among many other things, your work/life balance allowing you to manage your company more efficiently.
- No Communication Breakdowns
Communication is the Achilles Heel in every relationship, whether personal or professional. And when it comes to business, miscommunication can sink the ship. Nearshore development companies can help you avoid misunderstandings which may lead to costly mistakes for your business.
In addition, being closer to your team will improve communication dynamics with the outsourcing company, and consequently, you’ll reach your development goals faster. However, with that being said, you must discuss the communication terms with the nearshore software center before signing a contract. That way, you’ll ensure better team performance and faster delivery times.
- Access To A Larger (And More Qualified) Talent Pool
While on-shore outsourcing narrows your options, nearshore outsourcing opens your company to a vast talent pool of IT professionals. Yes, it’s true that if you opt for offshore services, you’ll have access to even more options. But nearshoring gets you not only qualified talent but also closer and with no idiomatic barriers.
You’ll have the opportunity to research the most suitable staff for your project needs, with the necessary knowledge of the technologies required. And what’s more, you won’t have to spend large amounts of money on training and onboarding processes. You just have to explore the options and choose the nearshore software company that can provide a team with the expertise tailored to your requirements.
Whether you need a team for a short or long-term contract, nearshore staffing is the best option. You can outsource a team permanently or for a fixed term or project. This flexibility also helps you analyze the team’s performance and opt to shift to another company if necessary.
Moreover, if you decide to scale your company, the nearshore development teams are scalable too to handle the increased business needs. And the best part is that you won’t have to make a considerable investment in-house to train new developers or familiarize them with the company culture.
The Challenges Of Nearshore Outsourcing
With such an extensive list of benefits, it seems difficult to imagine the cons of hiring a nearshore software center. In fact, there aren’t significant disadvantages, so we prefer to call them challenges, and they can be easily minimized. Let’s see what’s on the flip side.
- Nearshore Staffing Is More Expensive Than Offshore Outsourcing
Yes, offshore staffing may have lots of disadvantages, but when it comes to cutting costs it is way cheaper providing more competitive rates. Moreover, you may find that the nearshore companies available for your needs are more expensive than the offshore ones.
However, though we understand the business budget is crucial for the company’s survival, costs shouldn’t be the only aspect to consider when outsourcing software development. Though cutting expenses sounds enticing, it may lead you to make the wrong decision and, consequently, costly mistakes.
More affordable services won’t guarantee the success of your project. That’s why we suggest analyzing the real cost behind hiring cheaper nearshore outsourcing companies.
- Fewer Companies Available
The truth is the alternatives are narrow when it comes to nearshore development companies. If you think, you are searching within a region instead of globally. This presents a more challenging scenario for your selection and the hunt for top-notch IT talent.
But don’t be discouraged. It may take you more time, perhaps, to find the right partner, but the outcome, in the long run, will spare you more than one headache.
You should focus on the benefits your business will obtain when working with a developers team based nearby. And to avoid this challenge, the best advice is to define clear goals of what you expect to get from a nearshore outsourcing company.
- Frictions Between Teams
Another challenge for your business is the potential frictions between the in-house and nearshore teams. Though it is not very frequent, there’s a chance this occurs, and it’s better to be aware of knowing how to handle the situation and avoid project flaws.
We know it’s not easy to make a seamless integration between teams when collaboration is needed. However, software outsourcing companies nearshore handle teams of people with the same language and cultural values, making the integration process more manageable. This is why it’s so important to analyze carefully the company you will partner with and learn more about their core values.
- Lack Of Expertise Of The Nearshore Software Company
The challenge of finding a partner with the technical expertise in the tools your project needs is attached to the lack of options when it comes to nearshore outsourcing. Yes, you’ll have to do deep research if you don’t want to end up with a nearshore company that can’t reach your goals.
The IT outsourcing market is crowded, which is good but can also lead you to the wrong companies. So, avoid rushing to hire a nearshore partner and instead invest time researching and analyzing available options. That way, you’ll get what your business really needs to succeed, saving you time and money.
Looking For Long-Term Success?
Outsourcing has proved to be a helpful tool for businesses of all sizes across all industries over the past decades to cut costs and increase revenue. Now, with the fast technological developments, nearshore outsourcing has become a dominant player in the staff augmentation sector.
Though we have seen that the process can present some bumps on the road, the advantages of hiring talent in neighboring countries prevail. Choosing a strategic partner can boost your business productivity and efficiency with a highly qualified team.
Nearsure gets you the best IT talent in Latin America, helping scale your teams faster. With our wide array of staffing solutions, you can forget time-consuming hiring processes and expensive training, to skyrocket your goals!