Nearshoring Examples to Model Your Business
Everything You Wanted to Know About Nearshoring Examples to Model Your Business
U.S. companies are turning to nearshore software development for their project and I.T. needs. Here are some nearshore examples and other relevant nearshoring outsourcing strategies.
Technology greatly influences business in the current world. Constantly communicating with your employees and peers requires technological advancement to ensure ease and fluidity. Therefore, a company that embraces state-of-the-art technological progress is more likely to prosper because it will achieve better customer satisfaction. Modern companies in the U.S. and the world over are adopting nearshoring strategies that help minimize their costs of production while at the same time reaching out to global clients.
Outsourcing Examples and Definitions
Nearshoring, offshoring & onshoring are the three most commonly used strategies that most software development companies use. Larry Elder once said, “Outsourcing and globalization of manufacturing allow companies to reduce costs, benefits consumers with lower-cost goods and services.”
The examples below are great for solidifying your belief that nearshoring is effective. But how does this process start and finish? That’s a topic better discussed in the updated outsource business process that can be found here.
The following nearshoring are the details of the commonly asked questions, descriptions, and differences:
What Is Nearshoring?
The nearshoring definition is at times termed as nearshore outsourcing. It is the practice where a company outsources some aspects of its operations to a team in a neighboring country. The difference between nearshoring and offshoring is that the outsourced company comes from a neighboring country with the same time zones. A software development company can outsource aspects of its software development to its neighboring country to cut costs. For example, a company in the U.S. can outsource parts of its software operations to a group of experts in Mexico. The outsourced company will thus entirely handle their delegated operations and give a humble time to the outsourcing company to handle other important aspects of the business.
What Are the Benefits of Nearshoring?
The following are the advantages of nearshoring:
Nearshoring saves on costs
The main feature of nearshoring is that the two countries are close together and operate within the same time zone. It, therefore, poses an advantage because it helps cut down on the high costs of travel. Traveling from the U.S. to Mexico is way cheaper than traveling to China.
Nearshoring offers a software development company a chance to save on costs (1). It as well aids fluid operation because of the ease of face-to-face communication.
Closer nearshoring Geographical Proximity
The close geographical proximity between the outsourcing and the outsourced company is quite an advantage. Communication is critical in any other business operation, and apart from the standard virtual communication, constant face-to-face meetings are crucial. The close geographical proximities between the two countries, therefore, aid ease of operations because of the shorter travel distances.
Nearshoring Aids the Conglomeration of a Larger Talent Pool
Tapping talent from a neighboring country offers a great advantage to a company. The combination of efforts and skills between the two companies guarantees better production and helps the company achieve better client satisfaction. The outsourced company will inject fresh technological ideas because it brings together a team of experts with vast experiences in the field. Nearshoring allows the outsourcing company to concentrate on other essential aspects while the outsourced company handles its part.
For a more details about how important nearshoring can be for your company or software project, click: Why is nearshore important?
How to Find the Best Nearshore Partner
There are many aspects to consider when looking for the best nearshore partner for your software development company. The following are some factors you should consider before engaging any nearshoring vendor:
- Cost: Companies charge different prices for their services. As part of saving on expenditure costs, it is your role to do a background check and go for one that fits your budget—most outsourcing companies charges based on the standard per-hour model.
- Professional culture: Considering a company with a better cultural fit is essential. A company’s cultural fit ensures efficient communication with the clients. A lack of cultural agreement is a prerequisite for communication breakdown that will eventually undermine the company’s productivity and client relations.
- The vendor’s technical expertise: Expertise is crucial, especially in a field where completion is tight. Therefore, it would be best if you considered adopting a vendor whose knowledge and use of state-of-the-art technology are unparalleled to ensure that you stay on par with competing companies.
- Language skills: A remote team that speaks the same language as you is essential. The level of communication greatly determines a project’s success. A language barrier is a limiting factor that prevents a company’s progress.
At Sonatafy we understand the important factors that make an excellent nearshoring firm. If you’re a software development company looking at a possible nearshoring solution, we would love to chat! Click here to learn more about our nearshore software development services.
3 Real-Life Nearshoring Examples
According to Zartis Case Studies, the following are real-life nearshoring examples:
Dropp is one perfect example of a nearshoring company. It is a startup that offers last-mile e-commerce business delivery services (2). Dropp devised a strategy to maximize scalability and allow their products to reach the market at record speed.
The nearshore team brought a solution to drop in the following two phases:
The first phase focused on outlining a perfect technological strategy for the company. The company deployed a team to solicit information from Dropp about their current technologies and proposed plan.
The second phase involved assembling a dedicated team of experts to deliver on the devised technological strategy.
The nearshoring team helped Dropp devise a technological strategy to be used in the long term that aided the access to more clients at high speed.
Comparis is an online business based in Switzerland that deals with cars, motorcycles, and real estate. The company offers comparison services that help clients compare the prices and policies of banks and insurers.
In their quest to expand their React and .NET team of developers, Comparis sought the refuge of nearshoring strategy. The nearshore team, with experienced personnel’s from Spain and Poland, pooled together four people with experience in React, Typescript, .NET Core, microservices, cloud platforms, and NexUS. The nearshore team brought an immense workforce that helped Comparis extend its in-house capabilities. The strategy saw the company increase its productivity and achieve better client satisfaction.
Fexco is an Irish fintech and business service provider. In 2016, the company wanted to modernize its tech stack and adopt cloud-based software solutions. In its struggle to find the relevant expertise to handle the task, Fexco adopted the services of a nearshoring company from Spain. The nearshoring team amassed a team of 11 full-stack developers who helped move the company’s in-house software application to a new cloud solution. The team also introduced using central API and contemporary architecture and tech stack.
The nearshoring team brought a high investment return because of the collaboration between the in-house engineers and the experts from the nearshoring team.
Frequently Asked Questions About Nearshoring Examples to Model Your Business
Is nearshoring for you?
The covid19 pandemic is a good example that gave entrepreneurs a real clue on how to manage individuals who are working remotely. Having a specific individual handle aspects of your company’s operations from a distance can be a great way to achieve the company’s goal. Nearshoring can be good for you if you are looking for a perfect team and find hiring the right talent in your country challenging.
The following are three ways in which nearshoring can benefit your company:
It nearshoring Improves Your Company’s Efficiency
You could have a massive software project but not have the technical skills. In this case, nearshoring the operations to a team of experts from a neighboring country can be incredibly beneficial. It will relieve you of the workload and saves you the cost because you won’t have to retrain your staff or hire additional staff members. The strategy is good because it increases efficiency and flexibility.
It nearshoring Injects Fresh Expertise Into Your Company
You should consider nearshoring if you want a fresh gust of technological ideas in your company. Outsourcing aspects of your company’s operation means that you are not wholly dependent on your regular employees but are open to new ideas from the nearshoring team.
It nearshoring Is Not Financially Straining
If your company is not well established and is still financially struggling, then nearshoring is a good option. Unlike other strategies, nearshoring doesn’t involve extreme traveling because of the close geographical proximity between the two countries. Nearshoring will thus aid efficiency without digging deep into your finances.
What Is Offshoring?
Unlike nearshoring, the offshoring definition involves delegating parts of a company’s operation to an outsourced company from an oversea country. The outsourced company in offshoring comes from a far country with different time zones. For example, a software development company in the U.S. can choose to outsource aspects of its software development to a company in a country like China. Unlike Mexico, China doesn’t share the same time zone as the U.S., and although this can pose a challenge, entrepreneurs have turned it into an advantage. The difference in time zones allows the software development company to operate in a 24-hour cycle and achieve a higher number of clients.
What Are the Benefits of Offshoring?
The following are the expected benefits of offshoring:
It Saves on Costs
Every company desires to maximize profits and satisfy its clients. Amassing clients from all corners is another essential strategy for improving a company’s profits. Offshoring allows a company to gain global recognition by delegating parts of its software operations to an oversea country. Developing countries offer great potential because of their low costs of production. A software development company, therefore, stands a great chance of making immense profits if it outsources its operations to a country with a low cost of production.
Offshoring Enhances a Quick Time to Market
The difference in time zones between the two countries poses a significant advantage to the software development company. The different time zones allow the software development company to operate in a 24-hour cycle, thus boosting production and achieving better client satisfaction. The strategy also will enable clients from all corners of the world to access the company’s products.
Offshoring Allows the Pooling of Talents at a Minimal Cost
Offshoring software development operations allows a company to amass a large group of experts and aids the company’s efficiency. Tasking a team of experts from an oversea country with aspects of a company’s software development injects fresh ideas into the company’s operation. Therefore, it puts the company in a position where it can compete with other established software development companies. The strategy is advantageous because the company won’t have to spend money on training its employees and maintaining expensive equipment that helps operations. A company must task an already established company with software development operations and avoid the strenuous financial aspects like purchasing a license.
What Is Onshoring?
Onshoring is the third strategy that’s slightly different from the first two. Unlike nearshoring and offshoring, the onshoring definition doesn’t involve delegating operations to a team of experts outside the border. It is a business strategy that many software development companies embrace. It consists of outsourcing aspects of a company’s operations to a company within the same country. While the system looks strenuous to some people, it has many benefits. For example, a software development company in the U.S. can delegate some aspects of its operation to a company within the U.S. The main advantage of this strategy is the ease of communication and management. It reduces the costs of travel and makes operations and communications more fluid.
What Are the Benefits of Onshoring?
According to Newegg Business (3):
“As wages in an area continue to rise, however, it will quickly shrink the cost savings that a company gets from moving jobs overseas. For many companies, these savings have gotten so small that it no longer makes sense to keep jobs overseas.”
– Newegg Business
The following are some of the benefits that onshoring brings to a software development company:
Onshoring Significantly Saves on Costs
Onshoring embraces a wholly different strategy than nearshoring and offshoring. One advantage of onshoring is the closeness between the outsourcing and the outsourced companies. It, therefore, makes aspects of operations management easy. Delegating software operations to a company within the same country means the company will save a lot in terms of travel costs. The company’s overseer wouldn’t have to travel long distances and spend much money, like in the case of nearshoring and offshoring. Onshoring, therefore, cuts the costs of traveling and eases communication.
Onshoring Simplifies the Supply Chain
Shipping goods from an oversea country like japan to the U.S. is complicated. The amount of money and time wasted in the process is immense and onshoring is the perfect remedy for such hectic procedures. Having a domestic partner to help in certain aspects of software development is key to saving costs and easing the supply chain. It allows for a cheaper supply of goods and a comparatively shorter supply chain.
Onshoring offers enhanced cybersecurity benefits
One disadvantage of outsourcing software development is the company’s data risk. Bringing in a third party to work on certain operations of a software development company means that the company has to give them all the details and the data of the software development company. It poses a significant risk to the company because of trust issues. Trusting some companies thousands of miles away with the company’s information is risky. Onshoring offers a solution to the cybersecurity threat because it allows for more manageable management of a company’s crucial data due to the outsourced company’s closeness.
- How nearshoring can help you cut business costs
- About Dropp
- “As wages in an area continue to rise, however, it will quickly shrink the cost savings that a company gets from moving jobs overseas. For many companies, these savings have gotten so small that it no longer makes sense to keep jobs overseas.” – Newegg Business Quote