Nearshoring is the outsourcing of business processes, especially information technology processes, to companies in a nearby country, often sharing a border with the target country. The expectation of such business practices is a mutual benefit from the geographic proximity, as opposed to offshoring. What the partners expect to work in their favor is the proximity (easy travel), reduced language barriers, cultural similarities, and a shared time zone.
Offshoring involves shifting work to a foreign, distant country to reduce costs of the products or services. The money saving factor may really be a priority for many companies but this trend is shifting due to many issues which arise in offshoring collaborations.
For example, consider how hard it may be to pair up with a software dev company based in a distant country. The laws may be different, the time difference hard to work with (less contact, less control) and language barriers. The culture can also differ and the varying work ethics may get in the way of a successful outcome.
In contrast, nearshoring means that the business has shifted work to a lower cost organization, but within its own region, which means the collaboration is closer, stronger and you have more influence over your project.
The recent boom of nearshoring partnerships in Europe has shown how well such a cooperation can work. The relationships are usually between clients in larger European economies and various providers in smaller European nations. Major centers are in Spain, Czech Republic, Hungary, Portugal, Poland, Slovakia, etc. These destinations are attractive because they are low-cost, have very highly skilled people, and a less stringent regulatory environment, but more importantly, they allow for more day to day physical oversight. They also have strong cultural ties to the major economic centers in Europe.
Most companies from the USA nearshore to Canada, Mexico, Argentina, Brazil or the Caribbean.
Nearshoring has become a marketing differentiator for those nations and providers who wish to set themselves apart from sourcing centers in Asia, especially the dominant, India.
Software development is a serious matter so you shouldn’t take it lightly. Take a look at these advantages of nearshoring over offshoring:
Similar time zone, shared language, or good knowledge of a common one and proximity mean you can be fully in control and involved in your project. You need people who are close, who can communicate with you fluently and who are available during your working hours.
Would you be happy if your software developers took a long break during your working day? If you’re flexible, that may be ok, but consider different work culture and ethics. Do these people deliver on time or do they tend to take longer? It’s not about stereotypes, but rather facing reality.
Of course, cost efficiency is one of the major factors here, but is it really price over quality for you? Again, software development is not something you want to do at the cheapest price – it may cost you more later if the software requires fixing and improving.
For example, Poland is considered one of the hubs for nearshoring in Europe. Why? Because Polish developers have recently been rated in the top 3 in the world!
If you have any questions about nearshoring, partnering with us - a Polish company with Swedish roots or anything at all about software development, we’ll be happy to chat, just contact us.