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Nearshoring vs Offshoring – What’s the best choice for your IT company?

06 Jun 2017

Nearshoring vs Offshoring – What’s the best choice for your IT company?

facebook-notifyGlobalization and fierce competition is constantly pushing the businesses to lower their costs and increase their efficiency. As a result, many companies search for new resources abroad. This can be done in two ways – by near- or offshoring. Let’s see which one is the best choice for your IT business.

What is the difference?

Nearshoring and offshoring are both forms of outsourcing of production or services to an abroad company. In case of nearshoring, as the name may suggest, the company transfers the work to a partner located within its region. For a company based in the US, nearshoring would include contracting firms from Canada, Mexico or nearby countries of Latin America.

Offshoring, on the other hand, is a form of outsourcing that involves partnership with a company from a more distant location. The most common examples of offshoring is transferring the manufacturing to China or India. Nowadays, however, offshoring involves not only production plants but also a lot of white-collar jobs and services. This is especially significant from the perspective of the IT industry.

Choosing between those two forms of business strategy is a crucial, but not easy decision. Let’s look at both – advantages and drawbacks of each option, in order to decide which solution is the most suitable for your IT company.

What are the benefits of offshoring?

The list of benefits of outsourcing is almost infinite. Most of them apply to both forms mentioned above. Nearshoring, as well as offshoring, gives your company access to new resources, more vast network of suppliers and lower service costs. What is more, contracting abroad gives you a lot of flexibility without any long-term commitment. Finally, the main advantage of using the help of a foreign company is being able to focus on the core processes of your business, while your partner takes care of the secondary ones.

There are, however, some benefits specific for both forms of outsourcing. For example, in case of offshoring your company gets access to a global, not local, pool of resources. You can benefit from the newest technologies and efficient methodologies being developed on the other side of the world, even if they still weren’t adapted on your market. This is especially important in case of the IT industry, where using cutting-edge technology is a key to success.

What is more, offshoring to Eastern countries usually means much lower costs in comparison to staying in your local area.

 

What are the benefits of nearshoring?

Although a bit more expensive and limited, nearshoring also offers your business plenty of advantages. Staying within the same time zone can save you a lot of communication hassles. Finding the partner nearby means not only easier scheduling, but also a possibility of face-to-face meetings, which leave no space for miscommunications. Finally, no time difference allows for immediate problem-solving of urgent issues.

Contracting a company from the same area also reduces the risk of encountering cultural differences, which may affect the quality of cooperation. Similar working environment and habits, or even the same language, as in case of the US and Canada, can significantly increase the communication flow. This gives you the guarantee that the final outcome of the outsourcing will meet your expectations.

 

What is the best solution?

Although none of the options is perfect, and each of them carry some risks, offshoring seems to be a better choice for the IT industry companies. This is mostly because of two reasons. Firstly, lowering the costs to their minimum is an efficient way of beating the competition. Secondly, accessing the newest technologies and trends is the only way to stay on track with your business.

Finally, the disadvantages of offshoring can be easily overcome. When choosing a distant partner, make sure it has already been working with companies from your area. Thanks to this experience, your contractor will be familiar with your culture and language, and the quality of your communication will equal the one from within your country. What is more, if face-to-face meetings are important for you, ask whether the company has a representative located in your country and schedule a meeting in person.

Why Outsource Custom Software Development to Romania?

Next step

Areus is a great example of maximising the benefits of offshoring. Through years of experience on the US market, we are familiar with the industry standards, working culture and communication style. In order to make sure all the expectations are met, we often visit our partners on-site. Finally, by constant development of our human resources, we are able to offer the highest quality services for an extremely competitive price.

Contact us here via email or phone and bring your business to the next level of efficiency. It’s easier than you might think.

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