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Is Nearshore or Offshore Outsourcing Best for Digital Health Development?
Blog / Is Nearshore or Offshore Outsourcing Best for Digital Health Development?
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Marko Jakic•November 24, 2021
Chief Technology Officer & Serverless forever.
Outsourcing is a popular solution to today’s technology development challenges. Demand for developers continues to increase, but the number of qualified workers remains the same.
Recruiting experienced and quality developers takes time and resources. Depending on your deadlines and available budget, in-house recruitment may not be possible. You need to get your project off the ground now, not later.
Both offshore and nearshore sourcing offer the ability to scale your development, without the need for internal recruitment. This also means that you do not have to make staffing cuts when development demand drops.
Outsourcing development has benefits and drawbacks. Consider the priorities of your project to implement the best staffing combination for your organization.
Offshore Staff Augmentation
Offshore sourcing provides a supplement of staff, as needed. Typically, employees at a company are delegated to your project. They work with you for as long as the contracted term, and then continue to work for their parent company. Countries with cheaper labour, in other time zones, offer offshore staff augmentation.
Advantages
Offshore outsourcing is popular, and for good reason. The most recognisable benefit is the cost. Offshore companies can offer their employees labour at much cheaper rates than those in more local countries. Often, the partnership contract is fixed term, and fixed price. This keeps labour costs down. Low labour costs result in higher profit margins from the project.
Due to the fact that the offshore company is based in another time zone, this could mean that regular support is available more hours of the day. Any issues can be rectified in a much more timely manner. Ideally, this also means that the project can move forwards quickly.
Disadvantages
Offshore sourcing does present challenges. The majority of the issues related to offshoring are due to the location of the contracted company. Often, workers are based in countries on the other side of the world. They operate in a different time zone, and speak another language.
A language barrier can be a major problem. Translation errors and communication delays all slow down the development of a project. Outsourced workers should have a firm understanding of the project and its requirements. This is difficult to achieve when employees have different native languages.
The varying time zones can present a similar hurdle. The location of the offshore company will determine how your development is affected. The time difference between the two countries can delay responses. As a result, urgent matters can only be resolved once the offshore company is online. Communication can be disjointed within the collaboration.
Quality assurance is much more difficult to maintain. Offshore outsourcing involves companies from far away countries. This means that extensive travel is required for regular check-ins. QA can be done remotely, but may not be as thorough. Ultimately, this could result in redevelopment and further costs due to mistakes.
Some of these disadvantages can be overcome by adopting a different approach. Perhaps, you work in blended teams with the outsourcing company and your internal teams. Or you work to adopt a follow the sun approach, so that code is handed off and quality maintained.
Nearshore Sourcing
Nearshore sourcing is similar to offshore sourcing, except the partner company is based in a neighbouring country. This can eliminate some of the issues that offshoring presents. The company typically works on a contract basis, for a fixed term.
Advantages
The outsourced company is based in a nearby country. It is more likely that you will speak the same language, eliminating the language barrier. Communication is key to fluid progression in development. Changes, updates and issues can be communicated clearly between your in-house teams and the outsourced company. Also, decisions can be made in a timely manner, as both companies operate in the same time zone.
As a result, quality assurance is much more manageable. If face-to-face visits are required, neighbouring countries are easily accessible. In-person checks and audits are more thorough, and managers have increased control over the project.
Reduced costs are also still a benefit of nearshoring. Compared to in-house employment, nearshoring can offer fixed rates rather than salary expenses.
Freelance nearshore sourcing is also an option. The benefit of freelance work is that the worker can integrate more naturally into your existing teams. They may work remotely, but will have cultural similarities. This allows them to build a good relationship with your existing workforce.
Disadvantages
Whilst the expenditure required is typically less than in-house recruitment, nearshoring is more costly than offshoring. Offshore benefits from extremely low labour costs in the resident countries. Due to the nature of nearshoring, countries are more advanced and employees have increased salaries.
Offshore outsourcing can provide more productive teams than nearshoring. Due to the time zone difference, each time can work on the project for their corresponding working day.
Nearshoring companies are based in the same time zone, so will be working on the project within the same eight hours as in-house teams. Depending on the purpose of the development, you may benefit from more than eight hours of support.
Freelance staff require some level of training on internal processes in order to work cohesively with your teams. Training could take up valuable time and resources for your project. Therefore, it is important to bear in mind this additional cost when considering a freelance contract.
The Best Option: Find an Outsourcing Partner
Despite all this, it can be challenging to know which is the best option for your business outsourcing. Consider the following:
Strategy: The best strategy for your company will depend on your end goal, and your priorities. For most projects, a mixture of teams works best. Consider where offshore outsourcing may benefit you, and what areas of the project should be local. Generate a clear strategy for your development.
Partnership: Both companies can benefit from working in a partnership. Organizations should support each other to result in the best outcome possible. Form a give-and-take relationship, where both parties can progress.
Roles: Don’t just take developers from an outsourcing partner. You need to blend project managers, business analysts and more depending on the project.
Both nearshoring and offshoring generate transactional relationships between companies. Businesses work to fixed contracts, for fixed terms. As a result, ties can be cut once work is completed. However, this is not always the best approach.
Secondly, the primary benefit of offshore and nearshore outsourcing is reduced costs. However, cheap labour often results in a poor quality product, and no real mutual development.
A good relationship between outsourcing partners can be mutually beneficial. Partners can operate to each others’ strengths. By building a positive relationship, both organizations can widen their talent pool. Differing working experiences within workforces drives innovation.
Take the time to research and find the right partner for your project. Ideally, the right partner will combine all the benefits of nearshoring and offshoring. They should also have experience within your field, and a mutual understanding of the end goal.
At Vertrical, we combine a ‘follow the sun’ development model with experts in digital health and development. We work with companies to develop innovative health tech solutions. Contact us today to discuss a partnership for success.
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