Imagine the situation when after a long search on the local market, your HR manager still finds it hard to fill a position. What should you do? Nearshoring is a popular solution — but not the only one. This article will walk you through alternatives to nearshore software development outsourcing, and their pros and cons.
Different Types Of Business Process Outsourcing
Business Process Outsourcing (BPO) involves transferring specific functions to third-party service providers. There are several types of business process outsourcing:
Each type has advantages and disadvantages, so think carefully when choosing the suitable BPO model for your company. For instance, consider factors like talent availability, cost, time zone differences, as well as legal and regulatory limitations.
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What is Nearshore Outsourcing?
Nearshore outsourcing is about hiring an external service provider in a neighboring country. The collaboration may involve establishing a software development center or hiring a dedicated team.
The nearshore software development model can attract businesses with particular needs — for example, those seeking to expand the available talent pool.
Pros and Cons Of Nearshoring
A recent Deloitte survey has shown that one of the top concerns for executives when looking for a third-party vendor is a possible negative impact on a company’s culture. The nearshore software development model solves this problem. It offers access to like-minded professionals that easily adjust to your processes.
It offers a range of other advantages, such as:
- Large talent pool
- Candidates with in-demand expertise
- Reasonable hourly rates
- Time zone proximity.
However, there are also potential disadvantages of this model, which include:
- Language barrier
- Regulatory limitations
- Legal differences.
What is Onshoring?
In the onshoring model, a company delegates its services to a third-party vendor in the same country.
Advantages and Disadvantages Of Onshoring
The pros of onshoring include:
- Same regulatory and legal enviroment
- Streamlined communication, face-to-face meetings are quite easy to organize
- Low business trips expenses — the remote onshoring team is just a (relatively) short trip away
- Same timezone.
The disadvantages of onshoring are:
- Hiring costs may be high in some local markets
- Limited talent pool if compared to nearshoring or offshoring.
What is Offshore Outsourcing?
In the offshoring model, a company outsources its operations to a third-party vendor abroad — usually in another region or continent. This model involves async communication, which can be challenging. However, at the same time, it offers an excellent opportunity for around-the-clock service availability.
Pros and Cons Of Offshoring
Offshoring is a great choice for businesses as it brings an almost unlimited talent pool as well as reduces costs. Thus, the advantages of offshoring include:
- Access to nearly any specialized skill
- Operational costs reduction
- Competitive edge when entering new markets as local specialists are familiar with their ins and outs.
However, offshoring can present some challenges due:
- Possible legal discrepancies
- Communication barriers that stem from cultural as well as physical distance between the vendor and the client
What Is The Difference Between Onshoring and Offshoring?
The key difference between onshore and offshore outsourcing is where the development activities take place relatively to the client’s location. By definition, onshore operations occur within the same country as the client’s headquarters. Nearshore and offshore vendors are located abroad with the latter being so remote that the timezone differences with the client are significant.
Nearshore vs. Offshore Outsourcing: Which is Right for Your Business?
We recommend going for the nearshore model if smooth communication is of prime importance to you. In this case, timezone differences are slight, and you can easily reach out to your nearshore team.
The offshore model may come with some communication challenges. Nonetheless, it offers access to huge talent pools and better capabilities for saving costs. If you are not afraid of async communication and bringing cultural differences, offshore outsourcing is the right choice for you.
In this article, we explained popular BPO models and their pros and cons. The choice depends on your business needs and goals.
S-PRO has a proven record of delivering high-quality solutions for fintech, healthcare, and other industries while working in offshore and nearshore formats. Our company offers top-class nearshoring services for European businesses as our development teams are located in this region. For clients from other parts of the world, we are happy to provide alternatives to nearshore software development outsourcing for a reasonable price.
If you have a software development project in mind or require consulting services, reach out to us.