Business industry is growing rapidly lately and new solutions are being created every day. One of those solutions is called nearshoring and it is getting more and more popular with every second. However, not all people know what does nearshore mean. Neither they are aware of the wonders it can do for any type of business. If you are one of those people, this article will definitely help you out with an understanding of what is nearshoring.
Nearshore Definition and Its Importance in the IT World
If you are familiar with the term ‘offshore’, then ‘nearshore’ definition should not be too hard for you to figure out. Basically, it means transferring your business operations to another country that is located nearby. Usually, the nearshore definition implies that the company that you outsource your tasks to is located within the same region as your own.
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Today we are living in a constant ‘arms race’ of technology and businesses of all sorts have to take part in this never-ending competition in order to stay relevant in the market and be able to satisfy the needs of their target audiences. This is especially critical for the software development field. This way now we will move a bit from the broad nearshoring definition to the nearshore software development definition that even though is quite similar to the previous one, still needs some additional clarification.
So what is nearshore software development after all? As you probably have already guessed, it means delegating your company’s software development tasks to a foreign developer (or a team of developers) that is located within your region. Even though there are job positions for developers all across Europe, unfortunately, in this case, the demand is higher than supply. That is why most companies now not only know what is nearshoring but also heavily use it in their practice.
What Is Nearshoring and How Does It Work These Days
Nearshoring, in its essence, involves partnering with teams in nearby countries, making it an ideal choice for tasks requiring specific linguistic and cultural knowledge, like French Text Annotation. With nearshoring, French Text Annotation can be handled by experts who share a similar time zone and cultural context, ensuring higher quality and effective communication. Hence, the full meaning of nearshoring extends beyond geographical proximity to incorporate aspects like language expertise.
Let’s get a little bit deeper into specifics. First of all, what drives companies to turn to nearshoring after all? In most cases, it is the inability of the local job market to provide these companies with the type of specialists their clients require. Sometimes it is the unpopularity of the programming field in the country, sometimes the poor quality of the educational institutions that are supposed to produce great specialists. Facts remain the same – there is not enough number of a qualified workforce to cover the demand. So what does nearshore mean to most companies these days? Opportunity to perform at the highest level, the ability to hire great talents and costs reduction. These three reasons alone should be enough for one to consider using the global nearshore model.
Outsourcing practice is widely popular these days. If you take a look at this data, you will see that North America and Europe are heavily using the help of outsourcing and nearshoring in particular. Out of all jobs, usually, get outsourced those that are the most creative and require obligatory involvement of a human being. This is especially relevant to the IT field in terms of specific services, such as Salesforce development.
Nearshore Outsourcing Meaning
Nearshore was one of the first types of outsourcing that existed long before onshoring and offshoring. However, most business owners for some reason started neglecting it and choosing offshoring strategy instead. For the last couple of years, the nearshoring strategy found its admirers once again, as the number of companies that started moving their business functions to countries nearby, increased. If you think about it, nearshore outsourcing practice gained huge popularity because it allows one to combine benefits of other types of outsourcing, such as cutting costs and getting the quality of the services improved.
What Is Nearshore and Offshore: Main Differences
The ‘onshore vs nearshore vs offshore’ dispute will probably last forever. Today we will talk about the main differences between nearshore and offshore outsourcing process. So the biggest distinctions between these two are:
- The distance. This is the biggest difference between these two models, in case of offshore outsourcing the distance does not really matter, while nearshoring implies looking for a company within your region. While offshoring might be financially more beneficial for you, think twice before choosing this option. Will you be able to travel for many hours if you have to visit your outsourcing company? Is it crucial for you that your developers have a strong command of the language that you speak?
- The price. It is only natural, that offshoring is much cheaper than nearshoring. However, you will have to sacrifice such important things as language similarities or insignificant time zone difference.
- The control. Sometimes in case of offshore outsourcing, it might be difficult to control every little thing in the process, mostly due to time zone differences. On the other hand, when you choose nearshoring, you can be sure that the time for you to get to your outsourcing company will not be longer than two or three hours.
Nearshore Outsourcing: Definition of Its Benefits
Nearshore outsourcing definition, as we know it today, surely has lots of benefits. That is why more and more companies are choosing it as the primary model for their business strategy. So why exactly is it so popular these days? There are several reasons for that:
- Lowering the price. This is probably what is nearshore outsourcing is made for in the first place – reducing costs. Delegating part of your company’s tasks to another country’s specialists might significantly lower your expenses, as, for example, third world countries, offer lower prices and significantly higher services. However, some business owners are skeptical about trusting companies with low fares, thinking that the quality of the final product will be low as well. That is a common misconception that disappears in case of the nearshoring, as your company and the outsourcing one will most likely share the same culture, language and time zone, which implies a trustworthy business relationship.
- Hiring talents. A part of the nearshore outsourcing definition is the high qualification of executors. Most East European countries offer specialists with high profile education and at least several years of experience. That implies the high quality of the outcome of your business collaboration.
- Time zone convenience. Unlike nearshore, offshore definition often implies huge differences in time zones between the client and the outsourcing company. That is rarely convenient. Luckily for you, nearshore outsourcing allows you to have the same time zone as your executor or at least the closest one. This way whenever you need to personally travel to your outsourcing team or contact them in any other way – the whole process will not take longer than a few hours.
- No cultural and language barriers. Nearshoring often means that you outsource to the nearest country to your own. That often implies having the similar (if not the same) language and culture. It is much easier to conduct business when you do not have many differences in those two fields, trust us.
- Easier work with documentation. When it comes to nearshore outsourcing, it is quite often that not only language and culture are similar, but also the law. Usually, countries within one region have pretty similar legislation rules, which saves you and your lawyers time when working on legal documentation of any sort.
- Entering the new market. Sometimes nearshore outsourcing can also be used as a great tool to enter a foreign market, therefore expanding your company’s ‘territory’.
As you see, nearshoring has lots of amazing sides to it, that definitely make this model worth checking out and implementing into your business strategy.
FAQ
What is nearshoring and how does it differ from offshoring?
Nearshoring refers to the practice of outsourcing business processes or services to a nearby country, often within the same or a similar time zone. This differs from offshoring, where companies outsource to distant countries, often in different time zones, for cost savings.
What are the benefits of nearshoring for businesses?
Nearshoring offers several benefits, including reduced travel costs and time, easier communication due to similar time zones, cultural similarities, and quicker turnaround times compared to traditional offshoring.
Which industries commonly use nearshoring?
Nearshoring is popular in industries like IT services, software development, customer support, and manufacturing. Companies in these sectors often choose nearshoring to enhance collaboration and speed up project delivery.
What are some common nearshoring destinations for U.S. companies?
Popular nearshoring destinations for U.S. companies include Mexico, Costa Rica, and Colombia, due to their proximity, skilled labor force, and compatible time zones.
How can a business decide if nearshoring is the right strategy?
Businesses should consider factors like project complexity, the need for close collaboration, cost versus quality, and potential language and cultural barriers when deciding if nearshoring is the right fit for their outsourcing needs.
Final Thoughts on the Nearshoring Outsourcing Model
Maintaining a successful business is not an easy task these days. There is an enormous amount of supply that cannot be met by demand in most cases. That is why businesses are always competing with each other for the place ‘under the sun’. Luckily for owners, we are presented with new opportunities, that make that easier, each day. One of those opportunities is a nearshoring model of outsourcing. As you have learned from this article, this model can bring lots of benefits to your business activity.
One of the greatest things about nearshoring is that it allows you to reduce your business expenses. Another – being closer to your development team. This is especially relevant for those, who work in the IT field, as it often requires lots of supervision from the owner. Finally, nearshore outsourcing gives you an excellent opportunity to have a team of developers who are skilled, have high profile education, demand lower rates and speak the same language as you do ( so there will not be any kind of misunderstanding during the working process).
Unlike other types of outsourcing, nearshoring gives you some sort of a ‘golden middle’ between losing the ‘grip’ from your project by not being able to control it (as the outsourcing company is located too far away) and paying a ridiculously big amount of money to your location’s developers. That is why you should definitely give it a try. Lots of companies these days are successfully using nearshoring, why shouldn’t yours be one of them?
