Advantages and Disadvantages of Nearshore Outsourcing?

Advantages and Disadvantages of Nearshore Outsourcing?

A lot of software development companies prefer to outsource their projects or parts of their projects or processes to talents residing in neighbouring countries. This is called nearshore outsourcing and puts you at a competitive advantage in the digital landscape. However, it is not just software projects that’s been outsourced, a lot of other genres of business and services have been doing it too.

Actually, there are three forms of outsourcing – Nearshoring, Offshoring and Onshoring. We have already explained what nearshoring is, let’s look at the other two.

In Onshore outsourcing, the work will be done in the home country, only thing is you can contract with another company in the same country and get the work done there. 

In Offshore outsourcing, you can partner with a company from a totally different country that could be geographically far away from you. You can complete vital business costs at reduced costs in this manner. 

If you’ve decided to try the nearshore outsourcing route, then it would be good to know about the advantages and disadvantages of the choice, and you will know how to go forward with it. Some of the quick advantages would include cost-savings, access to rare skills and talents, and the flexibility to scale up and down. However, you should be equally aware of the flip side too because you will be able to make a wiser decision then.

The good things about nearshore outsourcing:

1. Time Zone Compatibility

When the time zones between the two teams, (one in-house, and the other outsourced) match, there will be fruitful collaboration all day through. You no longer have to send a message, and wait for a reply the next day because of the time difference. This way, changes and new requirements can be communicated quickly, have real-time meetings and save a lot of time and resources because you no longer have to travel to and fro. 

2. Cultural compatibility

There will be a lot in common with the cultures of people residing in neighbouring countries. From interests and likes to sharing favourite movies and songs. This would help them to build relationships, and the bonding will be much stronger. It would also be easy to incorporate the external team into the company’s culture because they would be able to understand that much better than teams from far off countries. 

3. Quality of infrastructure

Outsourced teams are likely to have better infrastructure to get your project done because they are focussed on providing specialised services. So they will update their tools and technologies regularly, and will send their teams to upgrade their skills in order to remain competitive in the market. 

4. Language Barriers are not there

Another benefit with hiring a nearshore partner is that you don’t have to worry about language barriers anymore. Words will not be lost in miscommunication anymore. Since most people understand English, it would be easier to communicate with people, with the local flavour and slang included. There are plenty of countries that are ready to take on work, but are not very good at English, and problems tend to crop up, as the relationship moves forward.

The cons:

1. The cost factor

There is no doubt that you will have to raise the bar on your budget with nearshore outsourcing. The cost will be far higher than what you need to spend with outsourcing to other countries. The focus is on the quality provided rather than the budget. So if you are going for nearshore outsourcing, it would be wise to realise that you will have to expand the budget to accommodate the project requirements. 

2. The feeling of ‘us’ versus ‘them’

It is not easy to develop that feeling of being part of a team. There will always be an ‘Us Versus Them’ emotion hanging in the air.  And there will still be some cultural differences that might still stand in the way, but it wouldn’t be as evident as outsourcing to a far off country. 

3. The choices are few

You don’t have many options in choice of countries as you can only look at a limited number of companies to partner with. Your hands are tied, and you might not even find the best match. 

4. Not ready to empower the teams

The external team must be sufficiently empowered on what is expected from them. The partner company would train them and update the skills, but you will need to educate and update them on the goals you are trying to achieve. The internal and external teams must be willing to co-exist and learn to share the tools and technologies for the project success. It is important to hire a reputed firm because a lot of data could be at stake, and protecting IP and consumer data is a priority. 

Things to look for in a potential partner

Once you’re sure that you need to outsource your project to a group of talents in a different country, you can start looking for a potential partner. Check out for these things in your potential partner:

Company headquartered in your own timezone

Ideally, the company can be headquartered in the UK or Germany. Having a domestic liaison is always helpful in smoothening out the wrinkles or bumps that are likely to arise in the working relationship along the way. It will also help in developing a more lasting relationship, because the laws will be the same, the currency will be the same, and the culture will also overlap.

Partner with a company that’s about the right size

By size, we don’t mean physical size, but a company that can scale and grow as yours grows. There are plenty of companies where you can outsource your work to, but they may not often have the infrastructure or the resources to scale, nor the resources

 to hire an excellent team of software developers.  The partner’s team should be like an extension of your own team, so they should have a full understanding of your company’s mission, goals and aims. 

Make sure they have an established business

While we explained that the software development should be resourceful enough to grow and develop as per client requirements, it is also important that they shouldn’t be like mushrooms, booming today, gone tomorrow. So make a thorough study of the company you are partnering with,  so you can be assured that they will remain in business for as long as is required. Other ways to check for business assurance:

Check for their testimonials 

Review their social media pages, and check how active are they

Review their white papers and case studies to know how they’ve handled various projects

Check their client list

Get specific details on how they’ve grown/declined over the years

Conclusion

Choosing the right partner would help you achieve your business goals much faster, cut costs, innovate better and release a high quality product in the market that would bring in more loyal users and fans. Navigating in the right manner, considering the pros and cons of nearshore outsourcing, and avoiding the potential pitfalls can definitely make the whole process successful. 

Interesting Links:

Why do companies choose Nearshore outsourcing?

More information about Nearshore outsourcing

Pictures: Canva

The author: Sascha Thattil works at Software-Developer-India.com which is a part of the YUHIRO Group. YUHIRO is a German-Indian enterprise which provides programmers to IT companies, agencies and IT departments.