No matter where you find it, outsourcing reaps huge benefits. This may include the use of a local outside contractor, an individual or a team within your geographical region (the EU, the Americas, Southeast Asia, etc.), or a fully offshore group at a physical location far away. Whichever of these three an organization should choose, the benefits have become quite obvious:
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There is no need to employ in-house IT specialists for your projects, a move that includes the cost of full-time salaries and benefits
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The specific tech skills and talents you need can be located anywhere on the planet, given current communication tools
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If you find the right outsourcing resource, one with the specific skills you need and with a solid reputation, you can expect to get the quality you demand in a finished product
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You can move from vendor to vendor, depending upon the specific skills that each project requires
Outsourcing is Not Without its Challenges
Whenever an organization is working with an individual or a team that is not a part of its in-house staff, there will be challenges.
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You cannot simply stop by your project manager’s office and discuss issues and progress face-to-face
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Significant time zone differences may make communication challenging, especially when there are urgent issues or questions.
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There is no opportunity for the parties to develop personal relationships, which are often important when long-term partnerships exist.
Defining Nearshore and Offshore
Given that local skills and talents are often hard to come by, organizations look outside their geographical areas for outsourcing needs. They have two choices – nearshore and offshore. So, let’s define each of these options first and then look at the pros and cons of each of them.
Nearshore
A company may look for its development and maintenance needs in a nearby country where the time zone difference is small and where communication can occur during both of their business hours. If it finds a reputable team that is a great fit, this is a great solution.
Offshore
A company discovers a reputable outsourcing organization or team that has precisely what it needs, but that resource is half a world away or more. Still, because of the fit of its need with the skills and talents available, it chooses to undergo the inconveniences for the quality it will get.
Pros and Cons of Nearshoring
Remember, nearshoring is a solution that involves locating an outsourcing team or organization that is not local but “close to home.” There are both pros and cons to this solution:
Pros
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Cultural differences are not as great. Consider, for example, a company in Germany with a development need that is a perfect fit for the expertise of a firm in Ukraine. There are far fewer cultural differences than if that company went to India for its solution. It’s much easier for the outsourced and the in-house teams to interact well.
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There are similar time zones, and the work hours of both client and vendor will overlap well, which is one of the benefits of working with nearshore software developers. So, meetings can be scheduled, issues can be addressed quickly, and the project will likely move well on its timeline.
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If necessary, traveling to a nearshore vendor is faster and less expensive
Cons
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In general, costs will be higher than with offshore vendors
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Your options for vendor choice are much narrower, and it could be more challenging to find the team or firm that has the strong skills for the development you need.
Pros and Cons of Offshoring
If that company in Germany went to India or Indonesia for its development project, then it has chosen an offshore solution. Why would they go so far? Because there are important benefits.
Pros
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The talent pool is much larger and the chances of finding the perfect “fit” are greater
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The costs are lower in most offshore locations – Ukraine, India, and Southeast Asia, for example
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Larger offshore firms have teams that work in rotating shifts to be available for clients in various time zones.
Cons
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There can be cultural and language barriers (though not always)
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Time zone differences can impact meetings, which will have to be carefully scheduled.
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If any travel is involved, it is hours long, and jet lag is a stark reality
Wrapping It All Up
Both nearshore and offshore development have advantages and disadvantages when a company does not want to incur the costs that in-house employment means. And, given the short supply of developers with the right skills in developed countries, contracting out just makes sense. To find the right team or firm to meet your needs will take some research, to be sure. Whether you choose nearshore or offshore should not be your top priority. That priority should be finding the right “fit” with a firm that has a solid history of success with the types of projects you need. And because you may have different needs over time, you may end up using many more than one firm.