Advantages of outsourcing: Nearshoring, offshoring and remote teams compared.
There are many reasons why companies may want to outsource. Lower costs are often cited as the biggest motivating factor, though that’s not the whole story. Lack of local qualified staff, access to a global talent pool, the ability to scale fast, shorter delivery time, and the fact that there’s no need to spend time and money on recruitment are all pull factors drawing companies large and small alike into the world of outsourcing.
The world of technology-driven businesses is so fast-paced and dynamic that sometimes you just can’t achieve workable and scalable growth in-house with a home-grown team. Outsourcing is a broad term which means delegating certain business functions or projects to a third-party company located anywhere in the world – two blocks away from your HQ or on another continent.
Companies offshore or nearshore 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. With offshoring or nearshoring you can expand your staff and chose professionals from a large talent pool.
Asia is currently facing massive competition from Europe from a quality point of view. Most western companies now choose Europe because of cultural similarities shared by the area and the company’s prospective clients.
Nearshoring means outsourcing certain business functions to a third-party vendor located much closer to your home — usually in the same time zone or one within a couple of hours of it.
Advantages of Nearshoring
● Time zone and physical proximity provides a significant advantage over more distant locations, such as Asia.
● Having a small or non-existent time difference means neither you nor your nearshore partner will have to work overtime or at night to synchronize meetings or stay in touch.
● Time and geographic proximity also enable a much more collaborative operating model. Communication and team interaction are made much easier.
● Faster problem-solving. Time zone differences will not get in your way when certain urgent problems need attention both from you and your partner.
● Less communication barriers not only limiting to mainly English.
● Travel between locations is made much easier and common under this nearshore model.
● Sharing a similar cultural background with your partner eliminates the need to change your work habits.
● Lower average salaries in nearshore countries can make this option preferable to trying to find personnel in your home country.
● Ukraine and Switzerland share very similar business cultures making team interaction more seamless. Working styles and communication differences across regions are much easier to navigate. Business rules, operating instructions, and even schedules are better aligned.
Disadvantages of Nearshoring
● Higher costs than offshoring. It is possible that contracting a nearshore partner will involve higher costs than an offshore partner.
● Cultural affinity. Even if the language is the same and time zone similar for both parties, there are still some aspects to be considered, such as holidays or other cultural nuances.
● Fewer providers. When choosing a nearshoring partner to work with you need to consider the possibility that finding one might be more difficult, simply because there are fewer options on the market.
Offshoring means outsourcing certain business functions to a third-party vendor located in a distant geographical location. The time difference we’re talking about here is 5–6 hours at least.
Advantages of offshoring
● Time zone benefits, receive round the clock support
● Global talent pool
● Lower costs than nearshoring, However wages are on the rise in India, China and Philippines
● More providers in the market
● Reduced expenses due to lower production costs, salaries, cost of living of personnel, etc.
● Uninterrupted workflow achieved thanks to the time difference between the in-house and offshore teams.
● Access to a global talent pool which makes finding professionals with the skills you need a lot easier than trying to find them at home
The Disadvantages of Offshoring
● Time difference is a double-edged sword. Communication can get very tricky if you’re normally asleep while the offshore team is working.
● Different work habits stemming from different cultural norms and attitudes about work can get in the way of your established business processes and will definitely require adjustments on both sides.
● Language barriers can cause misunderstandings and wasted effort unless you and the company you work with have at least one language in common.
● Long distances between you and the offshore vendor could make business trips a costly and cumbersome experience, especially if you need to visit your partner’s offices regularly.
Hiring a Remote team
Managing a remote team means managing a team whose members may be located in different offices, cities, or even countries, but they all report to the same organization and the same manager, sharing the responsibility for achieving the set goals and objectives.
The advantages of a remote team
● Full involvement in the recruitment process. The vendor preselects candidates based on your requirements, and then you personally interview and approve the members of your remote development team.
● No need to relocate, which is an impossible thing to do when your company operates in a certain geographical region.
● No need to rent office space, purchase equipment, or hire support staff, as these are provided by your partner.
● Saves you the costs and hassles of hiring in-house professionals, which can turn out to be a really expensive thing to do.
● Cut costs by taking advantage of the availability of a much cheaper labor market whilst maintaining the same quality.
● Full managerial control. You or your tech lead communicates with your team directly and manages the development process without third-party involvement or interference.
The Disadvantages of a remote team
● You need an in-house tech lead whose expertise allows him or her to run your remote development team effectively.
● Not a good fit for short-term projects that don’t require a full team of engineers.
Choosing your partner
Thinking of outsourcing development talent? You aren’t alone. More businesses are looking to take their innovation abroad to make deep cuts to overhead and spending while streamlining their development process for faster results.
Here are a few aspects to consider when selecting an outsourcing partner.
Your ideal partner should
● Have experience in projects or services similar to the ones you want to outsource.
● Have trustworthy references that can give you an idea of the experience other customers like you had with the company.
● Have teams of dedicated, qualified and trained professionals able to understand your needs and handle your projects.
● Be culturally compatible with you and people from your company. This will make the collaboration so much easier.
● Speak your language fluently, so there will be no communication barriers between you.
● Possess quality technologies and infrastructure, which will allow him to improve performance and quality of services you receive.
● Provide post development support, even if for a certain period of time.
● Understand your business objectives and help you achieve them.