The evolution of nearshore outsourcing

nearshore outsourcing

In the wake of the digital era, businesses striving to stand out in today’s competitive market are embracing change. For thousands of companies, long gone are the days of sitting in an office; they’re now switching to flexible work schemes. Across industries, businesses have the opportunity of finding top talent to join their teams from practically anywhere in the world. This of course also brings in new challenges related to choosing the best working strategy. And the reality is, options such as nearshore outsourcing might just be what your business needs, so let’s break down how it works.

First thing first… what is outsourcing?

Overall, outsourcing refers to a business strategy where companies delegate work to an external party or supplier. As a cost-effective practice, this allows part of the startup or corporate operations to be run by another professional team. Now, there are different types of models:

  • Offshore outsourcing. When the external organization hired is located in a different country usually with a different time zone.
  • Onshore outsourcing. When the business that provides the services is within the same region or country.

This business strategy results in increased productivity, especially during high-demand periods. Other benefits of outsourcing include expanding the company’s services and resources through an international staff with time-saving methods. 

What about nearshore outsourcing?

Is it somehow an in-between? Well, it focuses on hiring a team located in a country or region nearby. So, let’s say —for example— a business working in the U.S. can delegate and assign work to a team located in Latin America. As the time zone is similar or (in some cases) the same, nearshore outsourcing companies can avoid issues regarding schedules. 

However, the benefits go beyond deadlines, timing, and language barriers. The multiple perks of this strategy haven’t gone unnoticed by IT companies searching for savvy tech talent. Some benefits of nearshore outsourcing include:

  • Seamless integration. With offshore outsourcing, logistics may be affected due to time constraints, and geographic or even legal limitations. On the contrary, this model allows the core team to collaborate with their peers with little to no adaptability issues. 
  • Cost-effective strategies. Travel expenses and operations costs reduce considerably when finding a nearby company whose team can work within your company’s budget. This is particularly beneficial for startups in search of professionals whose equipment and skills can help develop their projects.
  • Talent pool accessibility. While there’s proximity, indeed, no longer is the talent pool limited to a specific job location. Your business can expand its infrastructure with a team of professionals whose skills, goals, and vision match your company’s values.

A brief look into nearshore outsourcing

According to an article written by Daniel Usifoh, co-founder of Axiom Sustainability Software, this practice can be traced back to 1950. As stated in “History and evolution of outsourcing”, it wasn’t until 1980 that it gained widespread recognition and brought great impact as a business strategy. 

As a more traditional approach, its main benefit was reducing operating costs and bringing an increase in profits. Nevertheless, as globalization came along, the idea wasn’t simply to reduce fees by employing external suppliers. Companies now aimed to strategize on resources and processes by collaborating with professionals who could deliver both innovation and expertise.

What about nearshore outsourcing? Let’s talk numbers. According to Statista, in Europe, the nearshore outsourcing market revenue from IT services grew from $93.12 to $103.9 billion U.S. dollars between 2016 and 2021. 

With rapid growth, this practice has become a well-established strategy for all types of businesses. Due to specific business needs, its functionality has centered around the tech sector. Grand View Research —a consulting company in the U.S.— reports that services in the states opting for this practice include:

  • Application.
  • Infrastructure capacity.
  • Network operations.
  • Help desk.

3 mistakes to avoid for a successful nearshore outsourcing

1. Going for the more “affordable” choice

As stated before, a traditional approach centered merely on the economic advantages of outsourcing might not be the most optimal solution.

While meeting the budget is certainly a must, don’t let this be the only factor that drives the final choice. Think of it as an investment in both quality and scalability. Though less expensive at first, the wrong choice can be a setback for the project’s profitability. Find a team whose goals, vision, and skills align with the company’s identity.

2. Not setting up a clear management

Delegating tasks and responsibilities regarding projects is helpful. How to employ this correctly? Collaboration and communication are key. 

For instance, defining outcomes, specific deadlines, roles, and workloads are effective starters. The idea is to work alongside a team where everyone adds positive value with the right guidance.

3. Failing to build a remote work culture

This one may seem obvious as the idea of nearshore outsourcing stands for a different and flexible work strategy. However, many companies fail to engage in what’s needed to thrive while remote working. 

Having poor-quality communication streams or not engaging with your team are some examples of this. How to fix it? Be consistent and open the dialogue with peers.

As there’s a high demand for tech talent, when it comes to nearshore software outsourcing, having a strategy is key.  

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