How to Choose Between Nearshoring, Offshoring and Onshoring: 5 Pieces of Practical Advice

In the last decade, outsourcing has become a huge point of conversation and interest in the global IT and customer service industry. If a company wants to achieve significant cost savings and focus their resources on more profitable work, working with third party companies is most likely the strategy they will be going for. There are three types of outsourcing: nearshore, offshore, and onshore. What is each of these alternatives?

• Nearshoring means outsourcing your project or work to a company from a nearby country.
• Offshoring is the outsourcing of business and work processes to companies, vendors, or individuals in distant countries.
• Onshoring means outsourcing your project or work to a company in your own country.

Why is it important to choose between these options? How could you address this issue from your workflow? Here are five pieces of practical advice to answer these questions.

Advice 1: Determine your specific needs and goals

Each one of these types of outsourcing has its pros and cons, but ultimately what commands which is the best for your company is the assessment you do of your needs and your goals. What do you want to achieve? Is it a long-term or a short-term goal?

For instance, if you want to improve the quality output of your company, onshoring might be the best alternative for you. Outsourcing companies that onshore are not particularly interested in cutting costs, but rather in keeping a high-quality output. Because of this, onshoring is not very common, as it does not actually provide much of a financial benefit, but you have a reliable and proved talent pool.

If you want to cut your spending in the short-term, near-shoring or off-shoring might be your best shot. Each one of these options provides different benefits. By choosing to offshore, you gain access to a much larger talent pool. You also open the opportunity to run your business 24/7, as you might want to have an outsourced team working on different time zone. However, you might have to deal with big linguistic and cultural differences. If you do not want to concern yourself with that, the benefits of nearshoring are almost the same, and working with a nearshore vendor mitigates the hurdles of traditional offshoring.

Advice 2: Take your budget into account

As we have seen before, one of the key elements of your decision is how much are you willing to spend on an outsourcing arrangement. This particularly important, as outsourcing is mostly used as a way of cutting expenses while maintaining output. Do not forget this piece of advice is closely bound with our first advice: it depends on the needs of your company. So, again, if you want to make a budget conscious choice, offshoring or nearshoring are your best options.

On one hand, nearshoring will save you costs in traveling and face-to-face meetings to coordinate with your outsourced team, as the nearshore teams will be located in a nearby country with a similar time zone. On the other hand, offshoring is also a very cost-effective alternative, as the company, individual or vendor managing your project will be in a distant country with very low expenses.

Advice 3: Determine which compromises are you willing to take

Each one of these outsourcing solutions comes with its compromises. Depending on your workflow, you need to determine which ones are you willing to take. With onshore outsourcing, you are compromising flexibility and budget for sustained high-quality output. With offshoring, you will have to deal with bigger linguistic and cultural differences, while sacrificing some control over your business; however, you can get the most out of your money while having a greater, almost unlimited, talent pool. In those terms, working with a nearshoring partner seems to offer the best of both worlds, as it is a cost-effective solution that avoids you dealing with big culture and language barriers.

Advice 4: Optimize your workflow

Once you have chosen a satisfactory agreement with a vendor, optimize your workflow in such a way that you may get the most out of the deal. The idea is for you to benefit to the fullest of the perks of the type of outsourcing that you have chosen. For instance, if you are working with a nearshoring company, try to keep close communication between the different development teams so that you can take advantage of the linguistic and cultural compatibility. On the other hand, if you are offshoring, try to model your development process in such a way that you can work around the clock and maximize productivity.

Advice 5: Improve and strengthen your communication channels

Project management is all about communication. No matter the choice you make regarding outsourcing, strong communication channels will make the arrangement much more productive both for you and your vendor. This is particularly important if you are working with an offshoring company. Try to have very clear protocols, chains of command and communication channels. Although your teams may work very independently, it is important to have a certain central control and good coordination. That way all teams can work together towards their common goals.

As we have seen throughout this guide, finding the best outsourcing arrangement for you depends on the specific needs of your company. For this reason, the most important thing is to make a thorough assessment of those needs and of the time you have projected to meet them. Whether it be to solve an existing problem, or to work towards future goals, outsourcing is an incredible useful strategy that will change the way things work in your company, keeping you and your clients happy. Ultimately, the point of these pieces of advice is to provide you with practical tools so that no matter your choice, your outsourced employees can work in harmony with the in-house team on different projects, all of this while keeping the costs down and the quality of the output consistent.

Check out or complete nearshore outsourcing guide for more information on the services Callzilla can provide as your preferred nearshore center.