What is IT Nearshoring? And How is it Different from Other Forms of Outsourcing?

There's no doubt about the exponential growth of outsourced services.

According to Statista research, in 2019, the global market size of these solutions exceeded $92.5 billion. And it's more than doubled since 2000.

But when we talk about outsourcing, things get confusing. Nearshoring? Offshoring? People often mix related terms.

We'll explain the differences and give you the best tips for choosing a nearshoring partner. Let’s dive in!

Offshoring vs Nearshoring vs Outsourcing vs Staff Augmentation

Let's start with the umbrella term. Outsourcing is the practice of using the services of external providers rather than maintaining them in-house. It's a common practice used for finance, accounting, human resources or technology. The basic idea is to leave the necessary tasks in the hands of specialists and focus on your own business. Providing a professional team can now rest on someone else's shoulders.

Now that we understand outsourcing, let's explore the variations: offshoring and nearshoring.

When we want to cut costs drastically, we turn to offshoring. Offshoring companies are usually located in distant countries with low wages and very different economic statuses. Very often, offshoring is also associated with a low level of service delivery.

Nearshoring, on the other hand, involves service providers located in a nearby or neighboring country. This usually implies a similar culture, work ethos and a better chance of finding real experts in the field. Smooth cooperation is easier with slight time differences and high language skills.

The last related term is staff augmentation. It means that we can add more people to the existing team based on their skills. The specialist or specialists support the team by providing their expertise. This form is similar to outsourcing and is usually done for a specific project.

When to choose nearshoring?

• When you lack qualified experts in your field
• When you don’t need a full-time employee for a temporary project
• When you are looking for developers familiar with unpopular technology
• When you want to focus on your core business services
• When you need to scale your project and need a more flexible solution

5 Common Fears About Nearshoring Software Development

While it is true that cultural mismatch, lack of communication and poor skills are all real concerns... We believe that well-managed nearshoring is a remedy and a powerful business accelerator. We will try to dispel your doubts by showing you our approach.

• Unclear communication - Building a successful partnership begins with solid communication. We focus on direct conversations and do not overlook the elephant in the room. Proactiveness and a serious approach to feedback are key - our partners can confirm.

Make sure that your nearshoring partner prioritizes communication. Trust is built over time, but taking the initiative is the first ‘green flag’.

• Language barrier - Finding common ground requires a common language. Professional proficiency in English is a must - we require it from our C-level and developers. But that's not all - we also focus on developing German skills for working with our partners in the  DACH region.
• Poor quality - Our team has many years of expertise proven by cooperation with both big and small brands. Remote working allows us to attract the best talent.
• Loss of control - We understand that trust takes courage. Together we work out the details and deal with unspoken expectations. The team augmentation model allows for flexible scaling, but it also provides a great deal of control and brings a new level of knowledge to the team.

Before you begin, find out who will be your single point of contact and how often you will be in touch for regular meetings, reports and updates.

• Cultural mismatch - We look for the greatest possible convergence of cultural values and work ethics while respecting individuality. Nearshoring (in comparison to offshoring) makes this task much easier. By collaborating in real-time, without worrying about significant time differences, the team can work smoothly and focus on reaching their peak.

5 questions to ask before nearshoring IT specialists (with our answers)

What are your typical response times to issues or questions?

• Our typical response time is within 24 hours, but we make every effort to address critical issues as soon as they arise.
• We understand that rapid response is critical to maintaining project momentum and preventing minor issues from escalating.

Are there any setup fees or long-term contracts required?

• Every project is unique, and our goal is to provide the most flexible and cost-effective solutions for our clients.
• We will never charge any setup fees and we do not require long-term contracts. We believe in building relationships based on trust and results, not obligations.

Do we need to consider any legal or regulatory compliance requirements?

• As a nearshoring partner, we adhere strictly to GDPR and other data protection regulations. We also comply with industry-specific regulations relevant to our clients.
• We can provide more specific information once we understand your industry and the nature of the project.

How do you ensure a smooth transition when integrating with our existing team and workflows?

• We have a detailed onboarding process to ensure a smooth transition. This includes an initial discovery phase to get to know your existing team, workflows, and systems. We then create a customized integration plan that aligns with your processes.

How do you maintain quality control and ensure timely delivery of tasks?

• Quality control is maintained through testing and review processes. We follow industry best practices and adhere to the highest coding standards.‍
• Timely delivery is ensured through effective project management where tasks are prioritized and tracked. We also provide regular updates to keep stakeholders informed of progress.

Summary

In summary, nearshoring stands out as a smart choice for businesses. Access to skilled professionals in nearby countries facilitates communication without cultural barriers. With nearshoring, companies can still maintain control over their projects and enjoy the benefits of outsourcing. Try this type od cooperation if you value quality and flexibility in software development.

Sources:

Statista - Global market size of outsourced services from 2000 to 2019