What is nearshore outsourcing? Examples and benefits

Outsourcing IT skills is a great solution for companies that want to get things done faster and at a better cost.

According to Deloitte, 62% of executives aren’t prepared to adequately address poor employee retention. At the same time, 87% of companies consider external teams part of their own organisation.

However, there are different types of outsourcing to choose from. Do you need a faster time-to-market? Do you also enjoy the idea of working closely with an IT partner? Nearshore outsourcing could be the right choice for you.

In this article, we're going to offer a comprehensive definition, an example and review the benefits of nearshore outsourcing IT services.

What is nearshore outsourcing?

Nearshore means outsourcing processes in nearby countries. Geographical proximity is a key factor differentiating nearshoring from other models. In contrast, onshoring is outsourcing in the same country, and offshoring means outsourcing in a more distant country, usually overseas.

Outsourcing IT services, in particular, is a very popular choice due to a skills shortage in the industry. In 2020, Europe (EMEA) covered one-third of the worldwide 46 billion euro IT outsourcing market. For example, Western European and Northern European companies often choose neighbouring countries such as Romania, Hungary and Poland.

Central and Eastern European countries are very attractive choices considering the minimal time zone differences. There is also cultural affinity to consider as well as a focus on delivering quality outcomes.

What is a good example of nearshore outsourcing?

Star-SHL is one of the Netherlands' largest medical investigation and testing laboratories. They chose Qubiz as their nearshore software development partner to develop multiple web and mobile applications. The 4 key reasons why are:

  • Working together with Qubiz as an integrated team 
  • Geographical proximity and cultural affinity
  • Recommended by another happy client
  • Understanding our way of working through face-to-face visits. 

Geographical proximity was certainly a deciding factor in this case as Star-SHL wanted to build an integrated team.

What are the benefits of nearshore sourcing?

As seen in the example above, nearshore software development has many advantages. Spoiler alert: they go way beyond lower costs for end-to-end IT services:

1. Optimising IT costs 

Yes, nearshore software development costs are much lower than hiring in-house specialists or working with a company from the same country. 

However, it’s also about getting more from your money overall. Choosing the right partner and pricing model can also increase your bottom line. Additionally, an IT partner also takes care of the administrative side, so your recruitment costs will automatically be lower.

2. Keeping up with innovation

It’s no secret that the right technology gives companies a competitive edge. Sure, cost savings can have a major impact. However, so does bringing in new skills, perspectives and know-how. 

With this uniquely challenging position of balancing cost and access to new skills and capabilities, curating innovation, and incorporating new remote working norms, organizations call upon the service provider ecosystem to provide critical solutions that are agile and integrated. (Deloitte)

3. Geographical proximity and time zone

Nearshore partnerships benefit from similar time zones, so collaborating remotely is much easier.

Geographical proximity benefits both you as a company and the IT provider. You will get to know the people that will deliver the project, as it's easy to travel. Additionally, you can pay regular visits to check on the project’s status and work together.

Your external team can also travel to visit your office. This will allow them to learn about your business first-hand. This is especially important for complex, long-term projects.

4. Improved security and privacy 

Security is a top priority for many companies. Data breaches, cybercrime and intellectual property theft can cost a lot and damage your reputation as a business. So, outsourcing IT services at a greater distance can be a hassle since countries have different security policies. 

Consequently, choosing a provider close to home is a good idea. For example, Romania is a member of the European Union, so contracts and payments are protected by European legislation. 

5. Culture and mindset fit

Cultural affinity means that you and your nearshore company have similar values. There are few, if any, language barriers. 

What’s more, nearby countries are more likely to have similar educational standards. For instance, the Bologna process in Europe ensures that many Western and Eastern European countries have a similar higher education system. Most importantly, this system has shared academic principles, which will then shape graduates' work ethic.

6. Remote collaboration

Communication and project management tools are just getting better and better. It’s also easy to monitor a project’s progress if you outsource all implementation to a dedicated team. 

An experienced IT provider has a lot of experience in remote collaboration. They can help you implement best practices even if you’ve never outsourced IT services in the past. So you don’t have to worry about setting up the perfect work environment. 

7. Prioritise core business

Hiring an extensive in-house IT team doesn’t have to be number one on your to-do list. The core business is your most important asset. 

For a laboratory, delivering accurate results is a priority. For a logistics company, delivering the best tool for optimising warehousing activities is a priority. Allocating the right resources to it can truly make it more successful. 

Hello, we are Qubiz

Qubiz is a one-stop-shop technology partner, covering the whole application lifecycle, including functional design and consulting, software architecture design, UX/UI design, software development, QA, and maintenance. 

We’ve been in business for enough time to understand that putting people first matters the most. Our unique approach has led to successful collaborations with many Western European companies, big and small, in The Netherlands, The UK and the DACH region. Our clients enjoy a trusted partnership, faster time-to-market and flexibility, among many other advantages. 

Learn more about what we do and how to contact us

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