Offshoring and nearshoring continue to be highly controversial topics in the IT world. But let’s take a look at these terms first. Both refer to the relocation of operational activities abroad. The primary difference lies in the distance. While this does not play a major role in offshoring, which is usually only cost-efficient in the short term, nearshoring refers to the ‘near’ foreign country.
Money and motivation
And we have already touched on the topic of ‘cost efficiency’. But why is this usually only short-lived in offshoring? – Because counterproductive IT outsourcing (regardless of whether it is IT nearshoring or offshoring) causes more costs in the long term if the necessary resources are not available.
However, the biggest motivator for resorting to this type of outsourcing is often a lack of the necessary expertise rather than the desire for greater cost efficiency. But you shouldn’t be put off here, because both are actually possible.
The various shoring models are primarily used by small and medium-sized companies. Here, however, the nearshoring offer is very meagre, as most IT companies do not offer this in this company range.
Of course, every company has the opportunity to buy in experts from all over the world. However, in addition to the budget, there is often a lack of organisational components.
The organisational basis
We are all too familiar with these outsourcing processes, including IT offshoring and IT nearshoring, from the various large-scale projects in which we have assisted corporate groups. It should be said here that even large, big-name corporations often fail in their offshoring endeavours. The reason for this is usually the lack of organisational elements such as unclear responsibilities, inadequate communication and divergent working cultures.
These points should be carefully considered by the team/management responsible for transitioning when offshoring. In the context of nearshoring, certain factors are easier to influence, but here too the criticality is very high.
Although we would rather not go into the topic of project management in this article, there is one thing that needs to be mentioned -> the objectives and expectations should be clearly defined in advance and communicated in this way.
However, if even large corporations already have problems with IT service providers in the shoring area, what is the best way to approach this topic? As already mentioned, the be-all and end-all is a basic organisational foundation. As a rule, a transition manager is deployed here, who ideally knows the source culture well and can set realistic goals. As part of this, processes, procedures and responsibilities must be defined and supported.
If this is the case, nothing stands in the way of successful IT nearshoring/IT offshoring. In addition, this not only relieves the burden on your own employees, but in the best-case scenario also significantly reduces IT costs.
Different countries, different customs
Let us now turn to other factors that are a major issue in offshoring and nearshoring.
The DACH region is probably the most straightforward, as the quality and cultural requirements overlap greatly here and the language differences don’t make the difference.
However, if we move our outsourcing to countries that are more attractive in terms of costs, such as Romania or Hungary, we need a better structured language interface so that the transfer of knowledge and information can take place as smoothly as possible.
Different economic points of view also play a role here, which is why you should obtain detailed information beforehand if you want to bring IT support from abroad on board in the long term.
Translated with DeepL.com (free version)
In conclusion…
It is precisely for these reasons that we increasingly recommend our customers to consider nearshoring and offshoring as a sub-segment if economic factors play a major role.
Outsourcing is a convenient tool and the driving thought is often quickly grasped, but here too, structure should not be spared, as the risks involved can be very high.
Digital Creek can help you to find out where outsourcing makes sense in your company and at the same time brings your business forward, because as an IT service provider it is our task and our goal to support you in all areas, be it IT consulting, contract programming or IT offshoring/IT nearshoring with the highest quality standards.
