How to Master Nearshore Outsourcing

Bohdana Muzyka
Lead Business Analyst at TechMagic, with a background in Project Management and QA, mentor, and speaker. Passionate about Business Analysis and Product Design.
How to Master Nearshore Outsourcing

No matter what industry you operate in, can you afford to keep your software developers from your country? If not, then you definitely need to look into outsourcing your software development.

Attracting professionals, saving money and time, and reducing the cost of taxes - are not the main advantages of outsourcing. Transferring part of the company's development or management services to a nearshore outsourcing company is becoming extremely popular in recent years.

Let us suppose. You may be asking why so many countries look for IT services in other countries. Is that correct? Furthermore, some companies prefer to hire IT experts from different continents. Why? The answer is obvious. Every business desires to receive low-cost, high-quality services.

The problem is that sometimes such services are not always available in a company's home country. As a result, the only option to get the necessary assistance is to hire expert staff from outside.

In this article, we learn about nearshore outsourcing, its benefits, and how to master it successfully. Let's start with discovering types of outsourcing models and why nearshoring is the best choice.

Differences between the outsourcing models

In 2020, the international IT outsourcing market was worth $342.9 billion. It is predicted to grow at a 2.6% CAGR from 2020 to 2027, reaching $410.2 billion. That’s why you need to know more about outsourcing models, but which one to choose?

The main difference between offshore, nearshore, and onshore outsourcing is the geographical distance from the client to the contractor.

Differences between the outsourcing models

Imagine that your company is located in Germany.

  • When you hire a development team from your country, it's an onshore model. Its benefits are the same language and identical time zone.
  • Outsourcing distant countries with significant time zone difference are referred to as offshore.
  • If your “Germany” company cooperates with a team from Poland - that is, from a neighboring country, this is a nearshore outsourcing.

But today, we will focus on nearshore outsourcing and its advantages. Let me show you how to manage it successfully.

Nearshore outsourcing

Nearshore outsourcing refers to delivering services from a nearby location, usually within the same continent or time zone. It is becoming more popular as an alternative to offshore outsourcing.

Nearshore development is used by 37% of small enterprises to manage at least one of their business processes. Companies most frequently outsource accounting (37%), digital market (34%), or IT operations (37%).

Assume you live in France and wish to delegate certain work that cannot be done in-house to a team from another country. At the same time, you want to save money yet don't want to deal with time-zone offsets. In this case, you can consider looking for a nearshore outsourcing model in nearby nations such as Poland.

There are many reasons why businesses might outsource tasks or services, such as cost savings, increased speed and accuracy, and the ability to provide a better customer experience. Want to see more?

Benefits of nearshore outsourcing

Benefits of nearshore outsourcing

There is an endless demand for change and reinvention in the software development sector. These are not differentiators for our competitors, but they are a must for any firm that wants to be at the top. Outsourcing software development is the best instrument to increase your capacity and efficiency.

Proximity and time zone

Geographic closeness is a primary benefit in software development since travel times and expenditures are less costly comparing nearshore vs offshore outsourcing. In-person meetings are easier and less expensive when your outsourced staff is close to your office since nearshore sites allow quick access to check the workflow.

That reflects in managing employees an external workforce is time zone compatibility. Managing the same time zones helps you to communicate with your team and have real-time dialogues throughout typical work hours. It protects you from losing sleep or having erratic work schedules and simplifies daily huddles, allowing you to have higher-quality outputs.

It ends up being a win-win situation for everyone, enhancing collaboration on both sides and making communication easier and more pleasant.

Cultural affinity

Cultural obstacles might be difficult to overcome when outsourcing to distant countries such as India to France. However, a nearshore outsourcing company is nearby enough that many representatives understand your culture. They will comprehend the difficulties of communicating and wanting to be handled, which can improve your customer satisfaction ratings.

Common laws and regulations

Businesses that outsource to foreign nations must examine the legislation in other countries. It is critical to ensure that your solutions will not breach intellectual property, data security, international trade, or other laws. For example, personal data protection is regulated differently in Europe and the United States.

The policy might cost billions of dollars in cross-border data transactions such as cloud services, advertising, Human Resources, and marketing. Cooperation with nearshore outsourcing businesses helps to solve this issue when nearby nations typically have similar legislation.

Easier communication

One of the most significant drawbacks of outsourcing is misunderstanding caused by cultural and linguistic barriers. According to National Outsourcing Association report, 75% of organizations hesitate about language and cultural differences when selecting an outsourcing provider. Different living styles and work attitudes significantly impact operational processes and end outcomes.

Neighboring countries share cultures, languages, customs, and festivals. As a result, persons with comparable mentalities should have no trouble communicating. It makes life easier if you and your outsourcing partner share the same holidays. You don't risk missing too many work hours because your coworkers in another area of the world are on vacation.

Being closer to your nearshore company and having the same time zone improve overall communication. You'll also find it easy to schedule meetings, communicate via email, and discuss reports. When it comes to your nearshore's performance, improved communication makes all the difference.

Less time for on-site interviews and onboarding

Even though unemployment may reach 32%, the IT industry is solid. Although the number of IT job listings has decreased by 16% since February, the huge layoff is unlikely to commence.

As a result, competition for experienced developers, quality assurance engineers, and other tech-related expertise remains fierce. Aside from that, in today's market, people are unlikely to gladly leave their positions, begin the round of job interviews, and move their cherished teams for unknown males they see on Zoom.

If you begin looking for a remote team internationally, you will accelerate the recruiting process and, as a result, the commencement of software development.

Access to new technologies

Increasing efficiency by 24% and getting help from a professional by 18% are the main reasons businesses prefer to outsource. Working with experienced specialists and software developers gives you access to technical advancement. When you outsource software development to a nearshore company, you are working with a development team that is up to date on the newest technologies and processes.

Focusing and scaling

Instead of worrying about software and infrastructure requirements, nearshore outsourcing allows you to focus on your important areas of activity and company. Outsourcing frees up your time, allowing you to focus on what is essential.

Nearshore software outsourcing is a good choice for firms looking to develop and scale strategically since it allows them to obtain what they need when they need it. Having fast access to IT resources is unquestionably advantageous.

Productivity

With nearshore outsourcing, you may have access to a specialized team of developers ready to deliver IT services tailored to your requirements. The result is faster operations and higher production, which allows you to remain ahead of your competition and launch the project on schedule.

Simple integration

Selecting the incorrect outsourced company might result in months of back and forth while you find out how to connect your internal and external employees. The new outsourcing provider may struggle to adapt to your company practices, and your customer experience may suffer. However, establishing a nearshore company will be much easier because the staff will be more familiar with the culture and nearby to visit frequently.

Cost savings

For example, a firm that provides house-moving services must create an application to simplify canvassing consumers. This type of corporation may also be interested in developing software for corporate management. A house-moving company's team is not made up of IT developers. Hiring an expert to do a particular task is a costly approach.

Businesses engage outside software developers to save money, conserve resources, assure excellent quality, and get their products to market faster. Creating and managing your staff from the ground up is prohibitively expensive. 70% of businesses seek to outsource services to save money. Despite being crucial to company goals, 59% of outsourcers say that an outsourcing strategy is primarily implemented to minimize costs.

How to master nearshore outsourcing

How to master nearshore outsourcing

Suppose you want to decrease time-to-market and effectively launch your product. In that case, you must choose a dependable and competent partner who can deliver your project on time, respond swiftly to modifications, comply with laws, and, in general, satisfy all your requests and expectations.

78% of businesses are pleased with outsourced staff

Keep the following points if you want to be among the organizations that have identified a reliable and top-rated nearshore software development provider:

Define your needs

The first stage is to determine what sort of software you require, which features should be included, whether it is cross-platform software or something simpler, and so on. The tasks and goals of your program drive the overall design and functioning.

Create a project estimate

Is it internal software for a small group of employees? Do you require ongoing technical assistance? Which resources do you need? What timeline does your project have? Do you need full-cycle development from an outsourcing company or assistance with UX/UI design or improving security services? The answers to these questions are critical because they will help you realize which outsourcing provider you need. For example, hiring an experienced team to create a single-page application with limited functionality might significantly impact your company's budget.

Don't be confused if you don't know where to start with project estimation, TechMagic specialists are ready to help estimate project prosses.

Research the nearshore country state

Once you've chosen to start outsourcing software development to Eastern European enterprises, you must select the most profitable site. Poland, Romania, and Ukraine are among the best destinations for people working in the rapidly growing IT sector. Outsourcing firms employ around 170,000 IT experts in Ukraine, producing a revenue of $2.07 billion.

Furthermore, the Ukrainian market is quickly expanding due to the 150 schools and institutions that educate students in STEM areas. The Polish labor market has 255,000 IT experts working in over 90 enterprises with 50 or more workers. They earn $1.38 billion in income and can attend 31 colleges nationwide.

Listen to recommendations

Outsourcing providers can say whatever they want on their official websites, but not everything is accurate. Your goal is to receive genuine references that will assist you in selecting the company that best meets your needs and expectations.

You must decide the technology and stack you will utilize to build your solution. Look for professionals who have expertise with these technologies and techniques and will be able to carry out your job. Determine how many experienced individuals and resources this nearshore outsourcing firm has. Reliable software development companies continually monitor industry developments and increase their skills.

Select the right outsourcing partner

The secret to nearshore outsourcing is finding the right company to work with. Not all companies are the same. Some charge too much, some offer poor quality, and others don't deliver what you want. You need to deal with the right company if you want to master nearshore outsourcing.

  • A good company is transparent. They will tell you exactly how much their services cost. They will give you all the information you need to make a decision.
  • A good company offers top-quality service. The services they offer should exceed your expectations. They will strive to provide you with the best service possible.

Before beginning any collaboration with a third-party provider, conduct extensive research on IT outsourcing businesses and gather as much information as possible. Define your expectations and budget from the start to ensure a fruitful conversation. It will enable you to establish common ground much more quickly and choose whether you want to engage a certain offshore software development firm. Furthermore, make a list of particular questions and examine the following elements.

Find out data privacy and security of company

If you don't want to lose your secret information, investigate how your potential partner protects sensitive data and intellectual property. A corporation should value privacy, implement precautions such as anti-virus software, two-factor authentication, data encryption, and sign non-disclosure agreements (NDA).

Investigate expertise

If you need to outsource software development, look for a business that has conducted projects using the same technology stack. This way, you may secure a better outcome while saving time on acquiring the necessary developers. Explore the websites to see their portfolios and case studies. Concentrate on key technology, industries, and solutions. Inquire about their developers' experience and conduct interviews with potential subcontractors.

Discuss flexibility

Tight timelines and frequent revisions generally govern the software development process. Most leading software development companies use Agile methodologies such as SCRUM, Kanban, and XP Programming to meet deadlines and coordinate collaboration. Such techniques enable them to establish a productive working environment and continuously build as needed.

As a result, while looking for a reputable software development business, be careful to enquire about its working methods. Discuss all stages of software development and engagement approaches.

Read reviews

There are various websites, such as Clutch.com, where you may discover what other organizations think about working with your potential partner. In addition, request that the company provide the relevant certificates and recommendations. Choose many firms that fit your requirements and compare their reviews. Alternatively, you might directly solicit input from software development agency clients to better understand the benefits and drawbacks of outsourcing.

Define the specifics of the contract

You must thoroughly cover your legal bases regarding outsourcing contracts by outlining several details. Work together with your lawyer, who can make this procedure very simple, to pull this done.

Your outsourcing contract must specify the task being performed, its cost, the deadlines for completion, and the deliverables. Other than that, the terms and conditions are mostly legally expected in any transaction.

Ensure that all communication is kept clear and consistent

Communication is the key to handling the challenges of outsourcing effectively. In each project, communication between the team and the management is critical. Communication that is coordinated, transparent, and ensures everyone's visibility is a vital success factor.

Nearshore practices must also be consistent with the company's business goals. To achieve alignment, you must have cultural closeness, linguistic competency, and a complete grasp of the market. Ideally, the organization should select its nearshore partner while keeping these objectives in mind.

TechMagic experience in nearshore outsourcing

TechMagic's goal is to provide scalable, cutting-edge IT solutions. Our technology stack is based on JavaScript, Node.js, TypeScript, Angular, React, Vue.js, GraphQL, AWS, Serverless, Firebase, and Native Mobile with iOS Swift, Objective-C, Java Android, and Kotlin. We develop software development, from web apps to AI and cloud systems. Read our reviews and view our portfolio on Clutch.

Increase productivity, cut expenses, eliminate faults, provide more assistance, and produce outcomes faster that benefits our clients in a long-term and highly efficient partnership.

Final thoughts

Nearshore outsourcing is the perfect alternative for those unable to locate specific experts in their own country, do not want to keep a team, or are just wary about offshore outsourcing owing to various hazards. They frequently involve time zone issues brought on by language hurdles and cultural differences.

“Clients do not require traditional vendor management. They want vendor management that understands technology, the startup environment, can assist finding business solutions, and manage internal stakeholders.”

Hiring a nearshore outsourcing business can work in your favor, but only under one condition. Before hiring external professionals to supplement your in-house team, you must balance all advantages and downsides and conduct extensive research.

There is no right or wrong answer here; it all relies on your company goals, the amount of money you spend on a project, and your general vision of future collaboration with a dedicated development team you want to hire.

Choose the best solution for your company based on its goals, expectations, and capabilities. If you are ready, contact us to see how nearshore outsourcing benefits you!

FAQ

FAQs on how to master nearshore outsourcing

#1. What is nearshoring, and how does it work?

Nearshoring outsourcing involves getting work done or services performed by software development companies in locations near the home country.

#2. What are nearshore outsourcing benefits?

Nearshore outsourcing benefits include lower costs, faster action, and closer access to top talent. Nearshore outsourcing can help companies get work done quickly and efficiently and save on travel costs. Nearshore partners are usually within an hour's flying time of most international locations.

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