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30 September 2022

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Do Not Drift Too Far: Advantages of Nearshore Outsourcing

Nearshore outsourcing has become a popular practice among businesses across industries, and you might wonder whether it is the best option for you. What are the advantages of nearshore outsourcing and what are the reasons to start nearshoring?  First of all, we’ve got to establish a precise understanding of what nearshoring is and how it is different from other types of outsourcing. 

Nearshoring and outsourcing in general have been common among large enterprises for decades now. The recent data by Forbes, however, shows that small and medium businesses also increase their share of outsourced projects. Now, more than 37% of SMEs outsource at least some of their processes to external vendors. Let us discuss nearshore outsourcing advantages and see whether this is a good option for you.

Benefits of Nearshore Outsourcing

Outsourcing, the process of delegating some parts of business processes to outside vendors, has been of huge help to many businesses over the decades. Outsourcing allows businesses to hire faster and cheaper, which provides higher ROI and faster product delivery. Talking about nearshoring outsourcing advantages and disadvantages, let us focus more on what nearshoring can offer to your business.

Closer Geographic Proximity

One of the main nearshore outsourcing benefits is that you can hire people from nearby countries. Nearshore offices are much closer to your location, so you don’t have to worry about the main problem of outsourcing – time zones. Being in the same time zone as your development team allows for much smoother communication, granting you more control over the team.  No communication delays and no night calls; just talk to your remote workers as you would to your in-house developers.

Similar Work Ethics

Another major problem with outsourcing is that people often don’t understand each other. And we are not talking about the language barrier – most outsourcing professionals speak good English these days. The main barriers here could be work ethics and culture. People in different countries and cultures have different life rhythms and work ethics. For some, it is essential to be on time at all times, some value interpersonal communication, some care about the business only. With such differences, conflicts and miscommunication cases can produce a detrimental impact on your project development life cycle and cost you significant overheads. All of these issues can be avoided thanks to the benefits of nearshore outsourcing

People in the neighboring countries tend to have somewhat similar cultures, similar lifestyles, and similar work ethics. That way you can truly understand your remote workers, see what their lifestyle is like, and comprehend what kinds of drivers motivate them to work harder. You can leverage this knowledge to further improve the efficiency of your team.

Operational Efficiency

So, you have a team of people located in a nearby country. These people speak English well so that you understand what they are saying. They live in a similar culture so you can relate to their lifestyle and their work ethics. They are in the same or nearby time zone, so you can talk to them during your working time without any delays. What you have is a highly efficient team of experts whom you can manage easily without any major interruptions. You get one of the main nearshore outsourcing benefits – operational efficiency.

Higher Return on Investment

Hiring people abroad is usually cheaper than hiring people locally, especially if you live in a developed country with higher-than-average living standards. Everybody knows about one of the main nearshore outsourcing benefits – it is more cost-efficient. For instance, for a German company, it would be more cost-efficient to hire teams in Ukraine, and for a British business, it would be a good idea to hire Portuguese employees just because of the economic disparity between the countries. 

Having hired good remote workers abroad at a lower hourly rate, you can save considerable amounts of money. Some projects go as far as a 40% reduction of the project budget just because they outsource it to foreign vendors. With a reduced cost of development, you can achieve faster and higher ROI than you would working with local experts. The economic benefits to your business paired with the efficiency of cooperation and smooth management make a strong case for the benefits of nearshore outsourcing.

Things to Keep in Mind

Of course, when it comes to nearshore outsourcing advantages and disadvantages, we cannot omit certain challenges of this approach compared to other options you have:

  • More expensive than offshoring – offshoring, a type of outsourcing where you delegate your operations to vendors in far-off countries, is generally cheaper than nearshoring. You can hire talented developers from a not-so-wealthy country and save even more money.
  • Less control than in-house – naturally, in-house and local teams are much easier to manage and control. If you can just meet people face-to-face any time of the working day, you can manage them better.

Wherever nearshoring lacks, it balances things out with other benefits. Basically, it provides a middle ground between onshoring and offshoring, cutting off the rough corners present in both types of outsourcing and providing a much more balanced approach.

Conclusion

The nearshore outsourcing advantages are many, and it is no surprise that so many businesses in North America and Europe turn to this type of outsourcing. You have a variety of choices when it comes to delegating your operation to an external vendor, but it is safe to say that nearshoring is by far the most balanced of choices. Combining all the benefits of classic outsourcing while mitigating almost all of its drawbacks, the advantages of nearshoring are hard to outmatch. If you want to achieve results faster, at a lower cost, and with much more confidence and control, nearshoring is your best option.

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