Nearshore Outsourcing – Everything You Need To Know

Editorial Team

Nearshore Outsourcing - Everything You Need To Know

Outsourcing emerged and gained popularity in the early 1980s as a way to reduce costs and acquire missing expertise. Today, it’s one of the most commonly used practices primarily in the software engineering industry. Nearshore outsourcing in particular is becoming more prominent due to its ideal balance between advantages and disadvantages compared to other outsourcing types.

What Is Nearshore?

The nearshore meaning is easily derived from its name. Simply put, it implies the transfer of certain tasks – sometimes even complete projects – to a third party located relatively close to the client organization. This usually refers – but it’s not restricted – to neighboring countries, as there’s not an official distance limit. As long as the timezones are the same or very similar and the cultural differences are negligible, it can be considered nearshore.

Since the term is considered a medium between onshore and offshore, it tries to combine the best of both worlds with as few cons as possible. These advantages define nearshore and are the biggest reason why companies decide on it instead of the other two alternatives.

How Does It Bring More Value?

1 – Simplified Communication

Even though it’s considered a global language, only 17% of the entire world population speak English relatively fluently. This means that offshoring carries a lot of risks since there’s a high chance that you won’t be able to convey your instructions to the third-party experts due to language barriers. Neighboring countries have many similarities in their languages – sometimes they even speak the same one. This results in easy communication and ultimately a better outcome.

2 – Similar Legal Systems

Invoices, documentation, taxes, and other important elements can vary greatly between countries, especially if they’re far apart. Nearshore outsourcing helps with not having to learn a completely new and different legal system that can take up a lot of time. You could always hire a professional for this issue, but this can get costly very quickly. Familiar ground with neighboring countries ensures that there’ll be no legal predicaments that could impact a successful project launch.

3 – Easy Management

How often you’ll have to communicate with the project manager of the outsourcing company depends on the project’s complexity. Management costs can skyrocket, especially if you’re dealing with a team located in a different timezone. This problem is non-existent with nearshore since the countries have at most a one-hour difference. Your working hours are in sync with theirs, allowing you to monitor the progress, give additional instructions, and so on at any time.

4 – Better Integration

Different values, cultures, and views on the world can make it really difficult for the outsourced team to integrate with the in-house one. This translates into a huge performance impact, time-wasting, as well as increased costs that could’ve been invested into the project itself. With nearshore, there are almost no cultural differences. The people usually belong to the same ethnic group which means the same religion, same tradition, same history, etc.

5 – Learning Opportunities

Outsourced teams commonly have access to top-notch infrastructure since they specialize in one particular area. Their methods are likely going to be more efficient than yours, which lowers the costs and improves the quality of the final product. With nearshore outsourcing, the in-house team can visit the outsourced team on-site since the distance between them is fairly small. This can help build better cooperation, as well as help the experts share their knowledge with each other for benefits that exceed the project duration.

6 – More Time & Money

Since nearshore provides the perfect balance between all aspects, the company has more time and money to focus on its main aspirations. Onshoring is connected with huge costs due to the higher salaries, while offshoring requires a lot of time for proper management. Nearshore is the best of both worlds, boasting an ideal price-to-quality-to-time ratio.

The Verdict

Nearshore outsourcing is versatile and it’s the best choice in most scenarios. However, if you have a very specific problem, one of the other two extremes could be useful. Try to write down the main goals and consult other professionals in the industry. After all, it’s better to take some more time until you decide than to choose the wrong option and waste your precious resources.