Benefits of IT Outsourcing and Nearshoring: Opportunities & Risks Overview

Businesses have begun exploring various options to address growing consumer demands that as a consequence leads companies' expansion. One of the options to resolve this is outsourcing and nearshoring in particular. Let's talk about outsourcing & nearshoring benefits. But first of all, you may ask, what is outsourcing? Outsourcing is the method of employing the services of an external company to deliver certain business processes or projects.

Types of Project Outsourcing

Outsourcing is a great opportunity to improve the efficiency of your company and boost your workforce. There are a number of outsourcing models that can be applied to your company, and the two most common options are Offshoring, and Nearshoring outsourcing models. Each outsourcing model has their advantages and, depending on your needs, could be an asset to your company.

Offshoring

Offshoring is the most common model for outsourcing web development. With offshoring, your company is outsourcing projects, tasks, or business processes to IT outsourcing companies or teams of developers. This outsourcing model is mostly project-based and will last only until the assigned work is completed.

Nearshoring

Similar to offshoring, nearshore outsourcing is also a project-based outsourcing model. However, to IT outsourcing companies or development teams in neighboring countries is what nearshoring offers. The nearshore outsourcing provides you with the opportunity to outsource your projects to companies closer to your business territorially.

Benefits of IT Outsourcing Companies

Whichever outsourcing model you choose for your company, there are certain benefits of IT outsourcing that remain constant in all of its forms. So what are the benefits of outsourcing?

Improved Productivity

Having the ability to focus on the core tasks and processes of your company is one of the benefits of IT outsourcing. This is an opportunity for you to build on your core skills and products, improving the productivity of your company.

Global Talent

Outsourcing is a way to reach a global pool of skilled and experienced professionals. Diversity in the workforce, especially with a large pool of talent, brings an eclectic set of knowledge and skills that have the potential to enhance the projects that you outsource.

Reduces Development Timeline

Because your team will be from all over the world, it is unavoidable that they will be working from a wide range of time zones. This ensures that your project will be worked on around the clock, shortening development timelines and increasing the frequency of output in your project.

Lower Costs

Instead of setting up a physical office and its necessities, the cost of outsourcing projects will focus more on establishing communication and project management tools. Communication tools, such as Skype and Zoom, and collaborative project management tools, like Jira and Trello, cost a lot less than office and utilities, and would at times be free.

Workforce Inclusivity

Through outsourcing, you are able to employ the services of a wide range of individuals, including those that have difficulty working in a regular schedule or work environment. With this, you are not only able to hire different types of skilled professionals, but also help these individuals to improve their situation despite the limitations.

Outsourcing Risks and Mitigation

There are multiple reasons to employ outsourcing for your company. However, there are also risks that should be taken into consideration if you are thinking of outsourcing business processes or development projects.

Risks of Outsourcing

• Potential use of incompatible tools or technology;
• Higher costs of face-to-face interactions;
• Cultural and language differences;
• Irregular work hours.

Mitigation Measures

• Communication is essential;
• Encourage feedback and dialog;
• Collaborative planning keeps everyone on the same page;
• Plan for and around time zones and work hours;
• Manage conflicts that arise.

Benefits of Nearshoring

There are similarities between the two different outsourcing models, however, what stands out, is the nearshoring model. Nearshoring brings all the advantages of outsourcing, as well as workforce efficiency and cost-effectiveness. Essentially, nearshoring is the approach of hiring staff or the additional workforce in the neighboring countries that is dedicated to addressing your development needs.

Nearshore Remote Team

This model provides you with the opportunity to hire or build a dedicated team with diverse skills and experience capable of handling various development needs.

Program Oversight

With nearshoring, you have more oversight on the projects that your development team is working on. You also have the capability to directly manage your development team.

Cost-effectiveness

In contrast to a project-based outsourcing approach, with nearshoring you get to spend less and still have a quality dedicated development team working for however many projects or tasks. The bulk of the cost will go towards retaining the development team, and not the recurring expense of a project-based approach.

Adaptability

Nearshoring provides you with the opportunity to hire a diverse workforce. This diverse workforce will be committed to completing your projects or tasks, which includes addressing the changing needs of your company. Nearshoring development teams are adaptable and can meet the various needs of your company, from the design, development, and maintenance of your systems.

Nearshoring: Build Your Own Development Team

Outsourcing is a great way to enhance the efficiency of your company and, depending on the outsourcing model applied, can be very beneficial to your company. Of the two outsourcing models, nearshoring gives you a lot more advantages over the other two:

• Capacity to hire or build your own dedicated development team in the neighboring countries;
• Oversight on the development team and their projects;
• Reduced development and maintenance costs;
• Adaptable development teams.

The nearshoring outsourcing model also ensures that the mitigation measures for the various risks usually encountered with offshore outsourcing are reinforced and implemented. This leads to a more productive and effective dedicated team of developers for your company.