Nearshore vs Offshore Outsourcing: What is better?

There was a time when you wanted to hire a secretary, you just had to put up an ad in the local newspaper and applicants would trickle in with their resume. But with the options offered through internet, the net has widened to an extent that knows no boundaries. Now you have access to a huge mass of trained assistants ready to serve you on a global level. It simply means that if you have a company in Germany, and you prefer to have your talent from India, you can easily have your wish. This is where nearshore and offshore outsourcing comes in.

Nearshore outsourcing

In simple terms, if you hire someone who lives in a neighbouring country (Germany, of course) for your project, like Poland or Romania, then that’s nearshore outsourcing. Companies in Europe and United Kingdom send a chunk of their work to countries in Eastern Europe.

Offshore outsourcing

Offshore outsourcing is different. It happens when companies outsource their work to not just their neighbours, but to far off countries as well. Both have their own advantages and disadvantages, so it all depends on what your aims are.

Now, that the explanation for nearshore and offshore has been cleared, you can decide which would be the best option for you. To reach a decision, you need to consider a few things, and those are described below:

1) The cost factor

If cost is a major deciding factor, then offshore outsourcing is a better option because you can always hire experts, but pay lower wages than your own native country. If you are planning to set up a virtual office in Philippines or India, then the cost would be fairly smaller than what you would need for an onshore or nearshore establishment.

If you are looking for the lowest hourly rate when you are hiring a developer, then offshore outsourcing would be the best choice because you can easily get the best deals in terms of cost per hour. However, make sure to hire someone who is good at communication skills, because poor skills can lead to wastage of resources and product delays.

If you weigh the two, then it goes without saying the nearshore offers a best of both worlds. You get to hire someone that’s closer to home, and you can work with the person during regular business hours. The time zones will be practically the same, so you don’t have to wait for hours to give instructions. Lower travel costs too, because you don’t have to fly someone in from halfway around the world during meetings.

2) Availability of talent

This is where hiring someone closer to your country could be a disadvantage because you might not get the right talent at the right time. And even if you do get someone, the price tag would be higher than what you anticipated. So when you need someone immediately, and you cannot find that skill nearby, you might have to cast a wider net. It is true that training a new person to the project requirement could be a little time consuming, but the chances of finding the right skill to the dot are much higher.

3) Flexibility in schedules

The best thing about employees in far off countries (examples would be India, Ukraine, China) is that they are willing to work as per client schedule. In fact, they are ready to tweak their timings and adapt themselves, even adjust their holidays and weekends. This may not be easily possible when you are hiring a person from a nearby country.

4) Expertise

The best talents, both new and veteran can be found in India, China, Ukraine, Philippines and so you can find most of the recruiters concentrating on those areas. You have a skilled workforce, with effective support packages and competitive rates. So if your company is based in Europe, then you could try your luck in these far off countries.

5) Language skills

Companies are comfortable in communicating in their native language, or English as it is the universal language. But the tone, pronunciation, intonation all varies from country to country, and the farther you go from your own native place, the more difficult it becomes.

If English language skills does not have utmost priority in your project, then you have more choice, but if you need someone who speaks English well, your choices while searching for talent will be limited. It is also possible to get good English-speaking employees from Philippines and India, however, you need to look carefully. Some people claim to have proficiency, which proves to be false later on. So don’t fall for such traps anymore.

Another advantage with hiring someone from a neighbouring country is that you can get people with shared languages and shared cultural nuances. So there is no need to make any drastic adjustments during the course of the project.

6) Comparing with onshore

However, you cannot fail to notice that both nearshore and offshore outsourcing presents a better option than onshore. You don’t have to waste time and resources on recruiting process, nor wait for the right person to pop out of nowhere. For iterative and agile development strategies, hiring from neighbouring places does offer the following benefits – rapid prototyping, fast and easy communication, cooperative development procedures and user-centric design.

True, onshore is cheaper than the internal thing because you don’t have to worry about wages, native restrictions and other factors that could ruin your budget. You can enjoy benefits like safer transfer of documents and information, low travelling cost and same time zones. A big advantage because you don’t have one half of the team working while the other half is asleep in another part of the world.

Closing Thoughts

If you don’t mind the geographical distance, but prefers to have better skills in your project, then you can try a country that’s not a neighbour. However, if you prefer to have someone who is closer to home, have cultural affinity towards Western countries, a robust outsourcing industry, then nearshore would be the answer.

Interesting Articles:
Onshore, Offshore, Nearshore: What’s Your Best Option?
Local vs. Onshore vs. Nearshore vs. Offshore

Picture Source: Flickr.com/ Hillary/ JSeaman


The author: Reema Oamkumar is engaged as a thought leader at www.Software-Developer-India.com which is a part of the YUHIRO Group. YUHIRO is a German-Indian enterprise which provides programmers to IT companies, agencies and IT departments.

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1 Comment
  1. Hi, Great piece of writing! Keep up the work!!!

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