At some point, it makes sense for almost every business to outsource some portion of the information technology functions — whether it’s a small business outsourcing its website design or a large business outsourcing its entire IT operations. Outsourcing often reaps serious benefits, such as lowering costs, ensuring a continuous presence for customers or clients, or providing instant access to a cohesive business unit that can deliver the results needed. However, it can have its drawbacks.
When a company is looking for help with its IT applications, outsourcing usually either happens very locally or very remotely. It’s either a friendly business down the road or a company based halfway across the world. It doesn’t have to be that way.
Nearshore outsourcing is a process of delegating some tasks — in particular, software development and business processes — to companies in neighboring countries to get better control over operational expenditures. This can provide cultural proximity, a convenient location, and the same or similar language.
Nearshore outsourcing can provide time zone parity. Simply put, this means your time zones are roughly similar. There are four time zones in the continental United States and six in total when you add Alaska and Hawaii. This can create some logistical issues at times. If you add in software support providers who are based on the other side of the world, it can be difficult to set up meetings and get answers quickly. In a crisis, this can mean vital lost hours.
Nearshoring, on the other hand, can eliminate this disadvantage. Many of the countries in the Caribbean as well as in Mexico and Central America are in a U.S. time zone, making collaboration simple and effective. When you have issues, you can call someone and get a solution during business hours.
You can also have the advantage of shared perspectives and cultural understanding. The U.S. is certainly a powerhouse in terms of its entertainment and cultural output. However, the further away you get from the U.S., the less its cultural norms are understood. This can prove to be a major disadvantage when considering design, themes, and the acceptability of references. Nearshoring your software development can ensure that you have access to teams with shared points of reference to local norms, keeping your customers happier.
Of course, there wouldn’t be any point in outsourcing if there wasn’t some sort of cost savings. Using a business focused on software development rather than hiring in-house reduces the cost of acquisition, lowers HR expenses, and spreads out ancillary costs (including non-IT costs). It also means that you don’t have to hire staff who understand the technicalities of software development — including IT managers — or develop a comprehensive road map for completing the overall project.
Nearshoring software development means you provide direction (which is a given for any project), but you don’t necessarily need to divide the project up across multiple teams and assign priorities. Your outsourcer can do most of that instead. A good nearshore software outsourcer should have a large, dedicated team that can handle this.
It’s also usually cheaper to travel to a nearshore operation compared to a completely offshore outsourcer. Depending on the nature of the project, it may make sense to consider this aspect.
As with any tool, nearshore outsourcing can be extremely beneficial for a company, but only if used wisely. When choosing a location, companies should research the level of employee training in the country of interest, its laws, and the level of intellectual property security.
Knowing the country’s general economics as well as the prospective partner’s experience, manpower, and technological understanding is also of advantage. It can also be very useful to ensure the nearshore outsourcing company has a U.S.-based management team to ensure it understands the demands and expectations of U.S. businesses and can train its software developers and engineers accordingly.
Ultimately, when done correctly, nearshoring can provide some serious advantages in terms of cost, compatibility, and communication.