IT OUTSOURCING: Nearshore vs Offshore. When to choose which?
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Nearshore outsourcing is the practice of hiring vendors based in a neighboring country. Companies choose to nearshore because it brings the benefits of onshore outsourcing (frequent and easier communication, fewer cultural differences, etc.) at a lower cost.
However, nearshoring has several cons, such as:?
? Far fewer vendor options to choose from than offshoring.?
? Limited pool and diversity of skills.
? Higher costs than offshoring.
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Offshore outsourcing refers to hiring vendors who operate from far abroad. For example, if your business is based in the UK, offshoring is hiring a vendor based in Vietnam or India.?
Companies choose to offshore because it offers many benefits such as:
? Access to a much larger number of options regarding vendors scale-wise and expertise-wise.
? Countries strong in IT outsourcing, such as Vietnam and India, can provide sizable teams for large projects.?
? Much lower costs than nearshoring.
Offshoring, however, is not the perfect solution for everyone, as it does have some disadvantages, including:
? Different time zones and greater distance can be detrimental to projects that require close and frequent collaboration.
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? Different languages and larger cultural differences can also make collaboration challenging.?
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? When constant communication between project team members is the key difference between a successful project and a failed one.
? When regular on-site visits from both sides are necessary to launch the project and manage its progress.
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? When the cost savings are worth the challenges.
? When your project doesn’t require frequent communication with your vendor.?
? When you need a large team size, or fill in the skill gap that nearshoring can’t bridge.
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