Remote work and outsourcing are quite common. Nowadays, companies need to explore every possible solution to bring their costs down and maximize profits. While remote work provides some benefits, there’s nothing better than outsourcing. When you hire remotely, you still spend the same money on resources, yet they don’t work closely with your team.
On the other hand, outsourcing provides significant benefits and cost reductions when done correctly. If you are exploring outsourcing for your business, you are at the right place. In this post, we will understand the two important models of IT outsourcing and identify which one is the best for your business. So let’s get started with offshore outsourcing.
What is Offshore Outsourcing?
As the name suggests, offshore outsourcing is a type of outsourcing where you hire resources from far-off countries. This type of outsourcing is often the best when it comes to saving money. Moreover, this type of outsourcing also allows you to understand the different geographies well when you are looking to expand globally.
It provides multiple advantages, and now is the time to understand those advantages.
Advantages of Offshore Outsourcing
A significant reason why businesses choose offshore outsourcing is the immense cost savings that are available. Offshore outsourcing can be done in developing countries where hourly rates are low, and cost savings can be realized without compromising on quality.
For example, while you pay $100 per hour for a middle-level developer in the USA, you may get the same level developer from developing countries for just $40- $50. In most cases, you can easily save up to 50% of your budget.
Hiring offshore developers is pretty straightforward. In developing countries, there are tons of agencies that specialize in these services, and you just have to find the right one. You can hire resources for almost all technologies and frameworks when you choose offshore outsourcing. Moreover, as the resources are easy to find, there is excellent flexibility, and you can switch resources anytime you feel so.
As soon as you post a request to outsource your projects, you’ll see an influx of proposals from various agencies and service providers.
Round The Clock Availability
Many businesses need to be monitored round the clock and serve customers across different geographies. In such cases, round-the-clock availability becomes crucial. That is where offshore outsourcing helps. It helps you to set up teams across different time zones and geographies that work to serve your customers round the clock.
Disadvantages of Offshore Outsourcing
Time Zone Issues
Time zone issues are one of the most common disadvantages of offshore outsourcing. Such issues can result in multiple inconvenient consequences, such as missed deadlines or poorly completed work due to a lack of control and communication.
It is hard to be available at all times and be a part of the development process, and that affects the project outcomes many times. You should create proper meeting schedules and set aside communication times to work better with offshore teams.
One of the main reasons why offshore outsourcing fails or generates a lot of issues is cultural differences. While something may be normal in your culture, it may be utterly contrary to the culture of the offshore service provider, resulting in discriminatory acts. Cultural incompatibility in Offshore Outsourcing can even affect project outcomes in such instances.
After understanding everything about offshore outsourcing, now is the time to look at Nearshore outsourcing.
What is Nearshore Outsourcing?
You might have guessed this right. Nearshore outsourcing is all about outsourcing your work and hiring resources from nearby areas. Some people consider nearshore outsourcing as a way to get resources from nearby cities and countries. This is a good way if you are looking to have like-minded people working on your projects.
Advantages of Nearshore Outsourcing
When you opt for nearshore outsourcing, you often hire agencies and other resources from neighboring countries. Your search is limited to the continent you belong to, and this allows you to experience cultural similarities.
In such partnerships, the differences in culture are minimal, and this allows teams to collaborate with each other better. Moreover, ideas can be exchanged, understood, and implemented more easily with nearshore outsourcing instead of offshore outsourcing.
Geographical closeness plays a vital role in selecting nearshore outsourcing for multiple companies. By leveraging this advantage, you can be in touch with your resources more. You can host meetings, have office visits, and also collaborate more freely because of the geographical closeness.
Moreover, it also provides you safety from fraud, as you can directly reach out to the Nearshore Software Development Company whenever anything goes wrong.
Disadvantages of Nearshore Outsourcing
When you choose nearshore outsourcing, you don’t get much cost relaxation. Most companies opt for outsourcing to reduce their costs, and if you are following the same path, don’t choose nearshore outsourcing. You will not have much price difference, and in some cases, you may end up paying more than your home country too.
Lesser Resource Choices
Another disadvantage that is faced by many companies who choose nearshore outsourcing is the lesser choices. It is natural that a particular geography will have a certain level of tech talent, and you cannot find it all in one place. Companies opt for outsourcing agencies because they have more resource choices at their disposal, but this does not work in nearshore outsourcing.
Here the resource choices are mostly similar to your own geography, and this does not serve any purpose. Due to this, even if you spend more money, you may not get what you are looking for.
Coming to an end, if you are heavy on collaboration and do not want many discounts on pricing, you may like nearshore outsourcing. But if you are looking to get maximum discounts and your work can be done from anywhere around the world, offshore outsourcing may serve your purpose.
Nearshore outsourcing does not provide round-the-clock availability, but it does provide time zone similarity, which is helpful in collaboration. Offshore outsourcing provides round-the-clock availability, and it is best suited for customer-facing businesses, but the team members may not be available for communication at all times when you work.
As a business owner, you have to gauge your requirements and decide which tradeoffs you are ready to make. It all comes down to your needs, and if you assess them correctly, whichever outsourcing model you choose will work for you.