Sometimes you have to go the distance to experience great insight. With business processes or web development outsourcing you aren’t going the distance measured in millimetres, centimentres, metres, kilometres but rather in your priorities. The distance you make is proportional, either directly or inversely, to the number of priorities on your list and value placed upon them.
Accordingly, before prompting for one of outsourcing vs offshoring strategies company management teams determine and carefully weigh up their priorities on following counts:
● cultural similarities;
● smooth communication flow
Having sorted out your priorities, research carefully the correlation between them and different outsourcing vs offshoring startegies before you measure your own right distance.
Obtaining services within the same country is mostly alluring because it offers a certain comfort level. It is not that every dog is a lion at home but same location exempts from neccesity to take inconvenient and costly long trips to monitor development or business processes on-site.
Another key reason why onshore outsourcing is number one choice among companies is the mindset and language issue. Communication breakdown and cognitive dissonance more often than not drive a wedge of misunderstanding between fellow citizens. This opinion turns for some business owners into a warranty of failure that dooms cooperation with offshore team since cultural and language barriers will only complicate the situation.
Nonetheless, despite easy manageability and economical onsite visits, price tags that come with onshore outsourcing services are really high often exceeding $100 per hour. Even if the price is agreeable with your company budget, odds are you will not find required expertise due to market tightness. It is reasonable to do a research on your country core competencies first and decide whether you can afford to wait until your onshore supplier hires ( onshore companies find it really expensive to maintain temporarily not utilized in-house personnel, e.g. programming specialists ) or trains specialists you need.
Nearshoring, that is outsourcing to a nearby location in similar time zone, is far more cost friendly ( hourly rates fluctuate around $40) and still accommodating to shorter travel times for facility visits. Language barrier is incidental and easily removed since nearshore outsourcing implies contracting businesses from nearby location whereas cultural differences are hardly an issue at all.
Noticeably, nearshoring mostly flaunts common strongsides with onshoring as well as shares weakpoints of the later. Problems may arise when particular niche expertise is requried. Comfort and convenience of pairing with culturally close teams located in the vicinity steeply drop down when among key priorities cost saving stands out.
It is hard to compete with offshore outsourcing strategy on two counts: expertise and cost. Popular outsourcing destinations both in Europe and Asia (India, Phillipines) have been gaining experience, expertise and skills working on external market a few decades. This stands to reason why offshore teams possess vast talent pool able to fill in all required market niches. Cost savings are huge advantage as well, hourly rates as low as %20 definitely give offshore locations a competitive edge.
If you look carefully fly in the ointment can be spotted. Traveling large distances to manage or monitor solution development onsite or long periods waiting for reply from a person on the other end is enough to stress out a customer let alone cultural differences and miscommunication that complicate cooperation further.
On the other hand, software development and business process outsourcing companies working on offshore markets have long come to realise their potential customers’ apprehensions at the thought of offshore outsourcing and are quite successful at eliminating them. In particular, Europe shares the same western mindset with its offshore customers and a growing number of specialists possess fluent command of English. You wonder how? Well, open international borders for some countries. Others invest heavily in education. Ukraine illustrates this to the full by introducing English as a main subject in all secondary schools and teaching it in higher education establishments. 103 institutions of higher education in Ukraine train developers with high both programming and foreign language skills.
Which shore is your best option, which strategy will fast track your company to the top totally depends on your priorities and resourses. So, determine your priorities, mobilize resources and go for it! Have a pleasant satisfying journey!