The new normal post-pandemic reality is finally here, so global industry leaders are rapidly realigning their business models and strategies to secure organizational resilience. One of the top trends shaping the business landscape in 2022 is nearshore IT outsourcing, which is now considered more risk-free than offshoring.
Is your company ready to adopt the nearshore IT approach to improve efficiency and productivity? Because now is the time to introduce flexible performance strategies and diversify your supply chain portfolio if you want to remain competitive in the long run. Check out TEAM’s quick guide explaining what benefits you should expect if you include IT nearshoring in your business strategy.
What is nearshore IT outsourcing?
You’re probably wondering what the difference is between offshoring, which you’ve been hearing about for years, and IT nearshoring, which seems to be the same but more cost prohibitive. Let’s dig in.
The concept of nearshore IT outsourcing refers to delegating some of your processes, operations, or engineering tasks to neighboring countries. Simply put, IT nearshoring combines the best of in-house and offshore worlds. It allows you to explore outsourcing first, without putting everything on the line by going offshore straight away.
IT nearshoring and 7 reasons to add it to your business strategy
We should note that we’ve listed only major advantages below. Nearshore IT providers can offer many more depending on your business goals and needs.
1. Cost reduction
If anything, the pandemic was an undeniable catalyst for digital business transformations globally. All the crises have also proved that a hybrid work model will define the future of employment from now on. So, why overburden your budget when you can reduce operating costs using the nearshore IT outsourcing approach?
In fact, 70 percent of organizations consider cost savings the main reason for partnering with external vendors, and rightfully so! Outsourcing human resources can secure around 27.2 percent of your annual ROI as nearshore IT rates are significantly lower, for instance. However, cheaper doesn’t mean worse—reputable providers ensure world-class nearshore IT services. They’re just more cost-effective, which allows you to optimize expenses during the post-pandemic recovery.
IT nearshoring reduces costs related to:
- Due diligence
- Recruiting, screening, and onboarding
- Contracting and overall engagement
- Mobile communication and business travel
- Process optimization
- Team and office management
- Labor overheads and onsite equipment
- Third-party technologies and tools
On the surface, offshoring sometimes seems less expensive, but it has its cons that can quickly neutralize this advantage. Meanwhile, the IT nearshoring model lets you not only save costs but gain more control over them and redirect saved funds to more pressing operational areas. Speaking more specifically, you can leverage IT nearshore outsourcing to extend your Azure cloud capacity, partner with cybersecurity firms, or use intelligent process automation on-demand—all for a lower TCO.
2. Efficient staff augmentation
The entire recruitment cycle takes time and effort, not to mention money. You can spend around 40 days hiring one highly experienced software engineer. It can take even longer if we’re talking about a rare tech stack or a whole team. But when you partner with a nearshore IT outsourcing company, you automatically accelerate your time to market as you get faster hiring and seamless onboarding.
Mature nearshore outsourcing vendors have:
- Streamlined recruitment processes
- Access to professional tools, platforms, and databases
- Bigger, more experienced recruiting and HR departments
- Ready-to-go talent pools with no fixed costs
- Well-adjusted upskilling and integration programs
- Tried and tested people management frameworks
Such efficient nearshore IT outsourcing services will enhance your business flexibility, as a vendor will do most of the work for you. At the same time, you’re free to scale your remote teams up and down on demand within the contract terms, which also saves on unnecessary expenses.
3. Access to international talents
Have you noticed how hard it is to compete for top-tier IT specialists in a hot job market? Nearly all our clients have faced this challenge, and we know that sometimes mountains must be moved to get the desired results. That’s why the nearshore IT outsourcing approach is so appealing these days—it provides unlimited access to engineering talents and narrow-focused technology capabilities you can’t secure locally. What’s more, nearshore talents can travel to your operating centers regularly and efficiently, if needed.
4. Insurance against talent shortage
The Great Resignation, also called the Great Attrition, is a raging economic trend of workers voluntarily leaving their jobs. Is it going to end soon? Far from it, as Microsoft’s report states that 52 percent of Gen Z and Millennials alone might consider changing employers in 2022. We must admit the IT industry is being hit by resignations too.
The Russia-Ukraine war has also added to the rising shortage of engineers globally. So, talent retention will most likely become the challenge of the decade. In these circumstances, nearshore IT outsourcing is one of the best risk management practices that can help you maintain business resilience and continuity through diversification of your delivery locations portfolio. Providers of nearshore IT services follow the most efficient retention and employee management strategies. They guarantee that they will do everything in their power to maintain the highest employee satisfaction.
5. Education quality and English proficiency
We think you’d agree that any project would go more smoothly and faster if your tech partner is on the same page as you. In practice, nearshore IT outsourcing destinations tend to surpass offshore counterparts in English proficiency. So, that’s one more reason why nearshore outsourcing is booming—language compatibility makes communication so much easier for everyone involved in development. What’s more, neighboring countries usually offer high-ranked educational systems with tech universities acknowledged worldwide.
6. Convenient locations with minimal time differences
A nearshore IT partnership minimizes problems with time zones and cultural peculiarities as workdays overlap in both locations. Moreover, the geographical proximity of nearshore outsourcing companies results in a higher level of control at every development stage because you don’t have to wait for eight-plus hours before your vendor comes online. You’re always close to the action, without the need to fly across the globe for a business trip.
7. In-house productivity boost
The nearshore IT outsourcing option is also a way to free your onsite employees for more mission-critical projects. Distributing tasks between locations allows you to set up well-balanced workflows to increase your in-house team’s efficiency. Harnessing the full potential of IT nearshoring can eliminate overtime work and prevent your employees from burnout. Allow your staff to reach their highest potential and maximize knowledge by working in perfect sync and sharing responsibilities with a nearshore software development team.
Nearshoring your development: a cure or a trap?
Will IT nearshoring work for your project? That depends on your targets and expectations. But as experts in nearshore IT outsourcing services, we can say with full certainty that the similar culture and business environment will significantly benefit your collaboration with external specialists.
Having a partner who follows the same world-class standards as you do and speaks the same language guarantees ease in doing business together. Add to that an opportunity to enter new markets and high-class customer experience, and we think collaborating with a nearshore IT services provider is worth a try. But we recommend assessing all possible risks before you select a location.