What is nearshoring? How does it compare to offshoring and onshoring, and what are the key advantages for businesses nearshoring software development?
Unless your business has the resources of Amazon, it’s hard to keep up with emerging technologies.
Expanding your tech talent pool, especially software developers, is not the easiest task, especially if your business needs the same expertise as the Amazon equivalent in your industry! This is where outsourcing is playing a key role, and nearshore software development services come in handy.
So what is nearshoring, and is it the same as onshoring or offshoring? Let’s find out.
Nearshoring vs Onshoring and Offshoring
How is nearshoring different from onshoring and offshoring? All three are different models of outsourcing.
Outsourcing occurs when by agreement, a third party has committed to deliver services to a company. For example, your business may outsource its entire IT department or just some tasks.
Often outsourcing involves the transfer of company staff to the business now providing the services.
The main difference between the three types of outsourcing – i.e. nearshoring, onshoring and outsourcing is the geographical proximity between the client and provider.
Nearshore outsourcing is hiring a physically located provider in a nearby country or in the same time zone.
Onshoring refers to using outsourcing providers within the same country.
Offshoring is more similar to nearshoring; the provider is not in the same country as its client.
Time zone compatibility
Time zone compatibility is less critical with offshoring, so the provider will be in a different time zone. For example, the client business may be located in the UK and the outsourcing provider in Australia.
Now let’s look at the pros and cons of nearshoring.
1. Close geographical distance
Compared to offshoring, the time zone of nearshoring improves communication throughout the workday. When there is an emergency or need for a critical update, nearshoring and onshoring provide peace of mind that key personnel will be available during usual work hours.
Offshoring providers will offer 24/7 cover, but it will come at a greater cost. Plus, upper-level management won’t be available at short notice. For example, for software development – scheduling a meeting to solve a problem in real-time leads to quicker detection and resolution of blockers during the development process.
2. Lower operational costs
Partnering with a nearshore provider lowers the cost of resources typical of onshoring or in-house service provision.
There is a trade-off, however, as service provision is not in the same workplace or country. This is where a tight SLA (service level agreement) is required to minimise possible misunderstandings and reworks and reduce overall development expenditures.
3. Wide talent pool
One of the reasons for using outsourcing is the scarcity of tech talent. According to Korn Ferry, by 2030, 85 million jobs are predicted to be unfilled due to a shortage of experts.
With outsourcing, staffing challenges are no longer the client’s concern. For example, the nearshoring provider must ensure the services are provided to the client according to the outsourcing agreement irrespective of any staffing issues they may be experiencing.
4. Unified cultural approach
Cultural affinity makes it easier for both parties to find common ground and promotes more fruitful collaboration, so it’s a valid reason to choose a provider in the same or a neighbouring country.
Choosing A Provider
The easiest way to choosing an outsourcing provider is to engage a consultant who manages the process for your business. Your consultant will do the initial business analysis, write up the scope of work and costs of services and finance.
Plus, they can bring in experts to consult on IT security and, in particular, cybersecurity, legal and compliance requirements. The ISO 9001:2015 and ISO 27001:2013 certificates are considered as a global standard within the IT sector.
Doing it all in-house is no longer cost-effective, and it can hold back businesses ripe for expansion and growth.
Outsourcing can be a competitive advantage, and there are many options from onshoring, nearshoring and offshoring.
For software development or big data management, nearshoring can provide the best of both worlds with cheaper costs and real-time comms, minimising delays during the software development cycle and quick fixes.
Get expert assistance in choosing an outsourcing provider.