The Top Reasons Why Companies Choose to Work With Nearshoring Outsourcing Providers

Is Outsourcing the Best Choice?

To say that the practice of outsourcing IT exponentially grew over the last 10 years is quite an understatement. As the world moved towards a more digital and virtual workspace, companies finally realized just how beneficial augmenting some of their in-house employees or finding additional third-party employees is for business in general. 

However, for many of those business owners and project managers, the idea of outsourcing seems somewhat overwhelming at first. There are, after all, many factors to consider when it comes to finding the right third-party team to take on important or sensitive projects. Additionally, factors such as cost, proximity, and even time zones are all critical aspects of the outsourcing process. All of them require careful consideration based on the projects and longevity of the potential contracts at hand.

Although many organizations think they prefer to keep an in-house development team, a lack of resources, general talent shortage, as well as budgetary and time-based constraints commonly make this a non-feasible option. Outsourcing provides a time and money-conscious solution to meet the IT and development needs of a variety of companies all over the world.

The Top Reasons Why Companies Choose to Work With Nearshoring Outsourcing Providers 1

Defining the Outsourcing Options: Nearshoring, Offshoring, and Onshoring

Once companies make the choice to go with an outsourcing provider for a long-term contract or a short-term project, they must still make a few additional choices concerning just how they’d like to outsource. This includes choosing which location-based type of outsourcing the company sees as the best fit for their partnership, including onshoring, offshoring, and nearshoring.

Onshoring is the practice of hiring a third-party company within the same country as the hiring company. For instance, when companies within the United States hire a development team from a company also within the U.S. This is beneficial for many reasons but also comes with its own set of drawbacks. 

Onshoring almost guarantees that the hiring company won’t have to deal with issues such as language barriers, time zone or cultural differences, and other problems that may come with working with providers outside of the country. However, living in the same country also comes with the same cost of living. This means much higher costs than other options.

As its name suggests, offshoring is when a hiring company partners with a service provider in a country or continent far away from their own. While the hiring company still receives all of the benefits of outsourcing, they also don’t have to pay as much as the cost of living outside of their own country is typically not as high. However, these lower costs come at a price as the location of the offshoring team means time differences, language barriers, and possible work culture differences. 

Nearshoring is somewhat of a “happy medium” between the aforementioned options. It helps companies cut costs by working with teams not necessarily in the same country but in a closer vicinity. This typically reduces issues related to time zones and work culture while also helping to ensure better communication.

Why Do Companies Choose Nearshoring as Their Best Outsourcing Option?

  • Proximity to the outsourced team. - Many companies choose to partner with a nearshoring provider because of time zone alignment. Some outsourcing teams work on the opposite side of the world from their hiring company, which makes real-time problem-solving and communication nearly impossible. Nearshored teams work within the same or a very close time zone to their hiring company, which helps with cross-team productivity and communication.

  • The balance between cost and quality. - While it’s often tempting for companies to simply choose the outsourced team with the lowest costs, that sometimes means lower quality results. After all, “you get what you pay for.” Nearshoring allows for reduced overall development costs while still helping ensure that quality levels stay up.

  • Better communication. - As nearshoring providers are typically within the same time zone or within only a few hours of the hiring company, it’s possible for in-house teams and outsourced teams to communicate instantly. Additionally, the outsourced teams typically speak the same language or share a common tongue due to proximity.

  • Reduced cost of travel. - Many companies want to travel to the offices of the outsourcing provider to get to know the team they will work with for the foreseeable future. While this is a great gesture and a good way to kick off a working relationship, travel is costly. Traveling to a country close to their own helps business owners save money and travel time.

  • A better working atmosphere. - Proximity to the outsourced country helps the hiring businesses to ensure that the in-house work environment and general working atmosphere will match better than one located in a country across the world.

Outsourcing of any kind is a great way for companies to reduce costs and offload in-house workloads while accomplishing their goals. However, company decision-makers must take the time to weigh the pros and cons of each type of outsourcing to find the best option for their needs. Nearshoring is typically a great option for cost savings while preventing possible issues that come with general outsourcing.

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