Over the years, a lot has changed in the ways we recruit employees for our businesses. Now that outsourcing has presented itself as a viable option for managing more than just back-office tasks, more and more businesses are subscribing to this seemingly efficient and effective solution to optimal productivity. It is not uncommon for an insurance company to have a customer service team overseas, or for an IT company to partner with a nearshore software development team.
And on that note, there is actually a difference between nearshore and offshore outsourcing. While everyone can no doubt benefit from general outsourcing, there are certain models of this process that suit some businesses better than others—depending on a number of factors, of course.
If you’re looking to dip into outsourcing yourself, it might be best that you know the three different types of outsourcing; onshore, offshore, and nearshore outsourcing. This way, you can pick the model that can truly optimize your business’s output.
In this article, we’re going to focus on the differences between offshore outsourcing and nearshore outsourcing.
What is Nearshore Outsourcing?
Nearshore outsourcing is the middle ground; the solution that combines the benefits of both offshore and onshore outsourcing. With offshore outsourcing, you pay a significantly lower cost for high-quality labor. With onshore development, you benefit from having outsourced partners who are located in the same timezone as you, speak the same language just as comfortably, and share your cultural nuances.
Nearshore outsourcing offers the best of both worlds. As the name suggests, the company is located in a country near you, so they’re still within the same timezone (or there’s not much difference between your times i.e. two, three hours at most). They are also often more affordable than onshore outsourcing partners because their cost of living is not as exorbitant.
Nearshore software development may not be as low-cost as offshore outsourcing, but the time and language benefits more than make up the financial difference. For instance, Colombia is an ideal location for nearshore outsourcing—especially for nearshore software development. They speak English just as easily as they speak their own language, their IT industry is booming thanks to the surplus of software developers and IT professionals graduating every year, and the time difference between Colombia and the US is only three to five hours.
What is Offshore Outsourcing?
As mentioned earlier, offshoring typically refers to working with a team based in countries geographically far from your location—which is why offshore employees are also often referred to as “overseas workers.” Many companies prefer offshoring to Asian or European countries because their hourly rate is much cheaper than onshore and nearshore companies.
However, low rates aside, offshoring comes with a fair number of drawbacks that you should definitely consider. We’ve already mentioned the extreme time difference that could present problems in terms of setting meetings, conferences, and team-building exercises. Collaboration may also pose a problem, as not every member can work on the project at the same time. Communication may be reduced to offline messages on chat platforms and emails that don’t get read until 12 hours after they were sent.
This is great for production and customer service (round-the-clock support), but it’s extremely detrimental for companies that depend on clear communication and cohesive collaboration.
These kinds of challenges can seriously affect your team’s overall productivity. Communication is important if you want to produce high-quality work while still being cost- and time-efficient. In addition, cultural differences can also lead to minor issues that could compromise company morale.
However, if you value quantity over quality or need 24/7 operations, offshore outsourcing is absolutely perfect for you.
Choosing the Right Company for You
Outsourcing has indeed come a long way over the past few years. The average business owner now has a number of highly qualified options.
Saying something along the lines of; “nearshore software development is far superior than offshore software development” is not a fair assessment—nor is it accurate. Your business is unique and therefore has specific needs. All businesses have different objectives; some may benefit from the balance of nearshore outsourcing, but others may find that offshore outsourcing better meets their requirements.