The state of Nearshore
Outsourcing is a popular choice amongst business leaders, but the way to do it can vary greatly.
This is why many are turning to nearshore.
Since the early 2000s, outsourcing has been progressively growing globally and has become a widely used model for partnering up and improve IT operations. Despite its rapid rise, there is still a vivid debate among business leaders about the best approach to outsourcing. Should companies outsource to a neighbouring country? Or go for the one that delivers the most bang for buck, no matter where it may be? Or is better to just delegate that role to a nearby city?
Although it can serve a range of services, nearshore is associated with IT, namely with development and helpdesk roles. But what is it exactly and how can it benefit companies?
The meaning of Nearshore
Say your company’s IT ticketing system needs to increase its output. Instead of hiring, training, and monitoring the team to do that, the companies that opt for nearshore go a unique find. They typically find an expert partner in the field that can do the job on-time and on-budget. But where? And why does it matter?
In essence, there are 3 choices:
- Nearshore, aka nearsourcing, refers to the outsourcing of services to an adjacent or nearby location, preferably a neighbouring country or that’s at least on the same continent. This helps to travel and hold face-to-face meetings more frequently, at a lower cost. You can also get more control over your business if you visit often and keep the team spirit high by inviting the development team to your HQ. The cultural compatibility reduces any chances of misunderstanding and facilitates work coordination.
- Offshoring is a most budget-cutting approach to outsourcing. Companies offshore their processes to outsourcing vendors in distant countries, usually India, China, or the Philippines, where the talent pools are full, and the expenses are low. The time-zone difference here plays a significant role in keeping your business work around the clock.
- A third option is to onshore or outsource to another city in your country. By using this approach, companies don’t face the risks associated with offshoring like cultural differences or foreign taxing policies, not to mention they invest in their country’s economy.
So why are so many leaders opting to nearshore?
The advantages of nearshoring
Covid has changed the way we work. Long distance travel is harder, making offshoring a step to far for leaders who still want to meet face to face regularly. And as the war for talent deepens, business may not find the knowhow they need in their home country. Nearshoring, combining a wide talent pool with a cultural fit, is on the rise. This is why.
Similar time zones
The concept of nearshoring means outsourcing from regions or locations that are geographically close—say, neighbouring countries, for example–and because of that, there isn’t a significant variation in time zones. Nearshoring is quite popular in Europe, which has only three times zones, meaning the collaboration is easy and the working day is not disrupted by different working hours.
Another benefit of the geographical proximity is much fewer cultural barriers between regions or countries. That means that not only working hours are similar (around 8-hour working days) but also social norms tend to not vary dramatically, allowing teams to connect and build trust.
Nearshoring allows organizations to choose a specific country where labour can be less costly than at home. Compared with in-house development, for example, nearshoring is more cost-efficient, since not every organisation has the means and capacity to maintain a dedicated IT team and department. Nearshoring grants these companies the possibility to outsource the support they need for the period they need it (have you heard of technical debt?).
Offshoring–check the differences: nearshore vs offshore–nearshoring is a lower-cost alternative. A closer proximity means there is no need to alter significantly the company’s work hours, or to have expensive business travel.
Larger talent pool
Maybe the major benefit of nearshoring is the access to a much larger, more diverse talent pool. Different organizations have unique needs, and recruiting specific skills locally isn’t always a straightforward process. The top 5 skills CIOs are looking for in a software developer can vary depending on location.
Nearshoring is becoming more popular by the day, and the proof is that even the giants are converting to it. Some companies that have gone all in with the nearshore model are Accenture, Ericsson, IBM, or Nokia Siemens Networks.
Global companies, local needs – where to nearshore?
Poland, Ukraine, Slovakia, Hungary, Belarus, and Czech Republic are some of the nearshoring hotspots right now.
But large and experienced organizations like Mercedes or Google took a different route and established a presence in a country with high standards of living, affordable prices, peace and security, a mature rule of law and the most sunshine days per year in continental Europe. This wondrous place is Portugal.
Portugal is the perfect location for nearshore outsourcing. Here’s why.
Portugal has a privileged location
A one-hour difference time zone from central Europe and two-hour difference from Eastern Europe, means Portugal is well placed to do business with everyone on the old continent. It is also relatively close to the American continent (being the westernmost country in Europe) and Northern Africa (with which it shares a cultural heritage).
Multicultural is the name of the game
The culture and social policies in Portugal include a very strong multicultural aspect, namely excellent linguistic skills–which facilitates communication with different countries.
Top-notch talent pool
Education in Portugal is another advantage to nearshore outsourcing in the country, since four of Portugal’s universities are present in the Financial Times Global Ranking, as of 2019. Such a small country, so much talent!
And, let’s be honest, if you need to take a trip to meet with your partners, Portugal is quite a lovely destination, from weather, to sights and to gastronomy. Too much? Oops, we’re done with bragging about our country.
How to get started with nearshoring
Wondering if nearshoring is for you and for your company? The main situations where a business should look into nearshoring are:
- Need for extra resources;
- Lack of expertise;
- Temporary or isolated needs to speed up performance;
- Budget limitations;
- Recruiting difficulties.
If you ticked one of more of the above boxes, maybe nearshoring is for you. To proceed with any kind of outsourcing, the most important thing boils down to choosing the right partner for your business. Verify if the company culture fits that of your organisation, if the services and solutions offered are compatible with what you look for, and finally, if the competence and expertise of the outsourced teams are the ones your business needs.
Need a (near) partner in your next business adventure?
And, if you’ve made it this far, you probably already realized that we, at Near Partner, are a boutique software house, offering outsourcing and, of course, nearshore solutions. Our (growing) team of talented and experienced developers, fluent in several traditional programming languages such as C++, Ruby, Python or Java, also has the knowledge of low-code technologies such as Outsystems and Salesforce. In fact, one of our teammates is an Outsystems Champion–and we are as proud as one can be.
Whether you know what you are looking for, or not yet, get in touch! We can help you with your next Outsystems project, with your Salesforce endeavor, and if you are about to undertake a development project… give our development cost simulator a try.