Is technology nearshoring right for my organization?
Have you ever wished to be able to access an expanding pool of skilled technology professionals at an affordable cost?
You’re most likely thinking of an outsourcing solution, whether it be through nearshore or offshore models. In essence, outsourcing is “the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff”. Outsourcing is a practice usually undertaken when the company cannot find specialty talent within reach and sometimes as a cut-cutting practice.
The nearshore concept wraps around the process of outsourcing tasks or business processes to different neighboring countries, to accomplish a greater control over operational expenditures. In other words, nearshore outsourcing passes on specific operational activities to a third party. It can be to an independent worker or a professional consulting and outsourcing firm. It is very common to subcontract specific tasks to specialists that can be difficult to find locally or within and existing team. Of course, the location of outsourcing services can have a direct impact on their distribution, cost, and suitability.
As a result, businesses that work with nearshore outsourcing are the ones that benefit from geographic proximity, same time zones and cost savings.
The Benefits - Proximity, Time-Zone, Cost, Availability
Nearshore outsourcing offers all the benefits of offshore outsourcing, including lower costs and access to a global talent pool, but without potential drawbacks such as major time-zone differences and differences in cultural working practices.
To portray it better, a great example can be that of a USA organization that has specific project or support needs that they either do not have capacity to execute on or do not have the skills required in house.
Simultaneously, the organization is looking to carefully manage costs, but equally does not want to deal with time-zone offsets; what they can do is to look for a talent provider or professional services partner in neighboring countries – i.e. Latin America.
"59% of American companies reported that it is 90% more difficult to find the right talent in 2022 locally, than it was 5 years previously" Manpower Group, 2022
The first step in readying for a nearshore partner relationship is to identify the specific specialty work you want to outsource. If you only need help with occasional tasks, you can hire through an on-demand outsourcing model. Alternatively for example, if you’re a growing startup or have complex scalable growth forecasts, you may want a dedicated team that only works with your business and can be closely integrated with your on-site staff. This guarantees that your nearshore associates are available in your usual work hours and exclusively dedicated to your project – just like an extension of your team who are probably already distributed in some capacity. Traditional outsourcing often describe that they work in your time-zone but this is not the natural working hours for their employees, disrupting their social and family lives.
If you are wondering if nearshore outsourcing is right for your business, it is important to cautiously consider the benefits and disadvantages.
Do you need to grow your technical team but have limited resources to do so?
One of the principal motives to consider nearshore outsourcing is because the business needs are increasing and you need more resources to sustain the operation, however, to make your growth more sustainable you need to control costs.
Nearshore outsourcing gives you the opportunity to supplement your business needs with the right talent at the right cost. Professionals beyond US and Canadian borders, have very good quality education, good English and communication skills and can be hired for a fraction of the costs of talent in developed countries like the US and Canada. Besides the current talent market in North America has proven to have a shortage in technical professionals and is becoming increasingly hard to find at the right cost.
A study executed by the Manpower Group, 59% of American companies reported that it is 90% more difficult to find the right talent in 2022 locally, than it was 5 years previously.
Statistics Source and Credit: Manpower Group, 2022.
Finding the right talent, at the right time
By outsourcing the talent scouting, a Nearshore services provider will execute all the recruiting process and vetting of the right talent. Freeing your operation of the burden that brings searching through sites and CVs for the right skilled team members. This can make scalability immediate and very effective, without losing control of quality.
Readiness to collaborate with a remote team
To work with a Nearshore provider and it´s pool of resources, you must be open and willing to collaborate with teams that work 100% remote. The team members will be located throughout the world, but within a time zone that is adjacent to yours. The Nearshore provider will bring all the capability to make this practice efficient and possible, however it is important that your teams and operation can accommodate this working style.
Economic and Cultural Diversity
Another less recognized facet of Nearshore outsourcing is that is is improving the economies of less privileged regions. Giving highly qualified professionals in more challenged economies, the opportunity to access financial stability, training, and above average benefits that are often not possible when working for organizations inside their own economy. This model also gives professional access to leading-edge projects in multinational enterprises, and as a result the ecosystem raises the bar to maintain the highest quality in education and access to training in the countries where the talent is found. Nearshore expands knowledge, growth, and empowerment to groups from minority backgrounds, women in technology, and remote geographic locations, equalizing opportunity and wealth. Including people in your teams from diverse economic backgrounds improves inclusion and opportunities for others to experience different working styles, andimprove your organizationsdiversity.
Is Nearshoring suitable for all organizations?
Simply put, yes. Any company, from fortune 500 corporations to smaller family businesses can leverage nearshoring. Traditional consulting and even contractors are out of the reach of most small businesses, often stunting their growth, and offshoring is too complex an engagement mechanism. But, with vastly reduced costs and simple engagement models, smaller organizations can easily get the external help that will help them grow.
The best nearshore providers will provide full-service consulting, meaning that the talent is hired, onboarded, trained, and coached to be as professional and capable as your employees are. All that is required from the client is to have an open mind and tolerance; be aware that you will be collaborating with professionals from different cultures and backgrounds, and despite having an almost perfect English, most likely it is not their first language.
Nearshoring can certainly be of value to companies if it’s used intelligently. It can allow them to take on more work, assigning their in-house team the important projects while optimizing the costs on more skilled specific tasks. When choosing a nearshore service provider, companies should research that both organizations principles align, the satisfaction of their employees, the level of data management security, and the nearshore company’s level of employee training.
But, why don’t I just hire a freelancer or an offshoring agency?
Again, this all depends on the type of help you need and the structure and ability of your organization to manage the workload.
There are hundreds of freelance agencies in developed economies, but it's worth remembering that you are the one doing the vetting, and there are no guarantees if you make a wrong decision. Furthermore, consider whether you need the project to be managed and the work to be quality assured – the best nearshore vendors operate much like a traditional consulting firm when needed, bringing project management, work quality assurances, and the ability to change people easily – none of which you get with a freelancer.
On the other end of the spectrum, offshore organizations offer higher degrees of scalability and provide many of the same services that nearshore capabilities do often at slightly reduced costs. However, due to their size and geographic location they often utilize much more complex engagement models that lack flexibility, and communications need to be very carefully managed to deal with the time-zone challenges (often in excess of +/- 13 hours to the USA and Canada).
In summary, prime nearshore professional services providers can really be viewed as similar in stature to traditional technology consulting and staff augmentation partners. This is ever more relevant with the acceptance across industries of remote working practices, the advantages of using local staff augmentation partners exclusively have all but disappeared.
When you consider the significant cost savings, maturity of the best nearshore providers, and the time-zone proximity, it’s very hard to ignore the advantages offered by nearshoring.
If you are interested in hearing case studies from some of Proactiviti’s clients, or more about what you have read, please email us at firstname.lastname@example.org or visit our website at www.proactiviti.com.
Craig Wake has been in technology consulting across the globe for over 25 years and is currently leading Proactiviti's market expansion and growth strategy operations across Latin and North America. He is the father of two, and married into the Latin community.