How nearshoring service models can benefit businesses

21 May 2021 Consultancy.eu 7 min. read

Digitalisation has not only brought technologies and innovative tools to our daily lives, it has also changed the way of business conduct. Kateryna Boiko – a director at Ukraine-based nearshoring specialists Mobilunity – writes about the benefits of nearshoring versus outsourcing as a service model. 

IT outstaffing agencies as well as outsourcing vendors allow companies to grow their operations via attracting qualified specialists from all over the world. The services of both working models have their advantages and disadvantages, but after analysing your goals, resources capacities, and other factors you will be able to choose the option that will best suit your needs.

Let’s put a period in defining the difference between outstaffing services and outsourcing, clarifying what works for your company, and what are the key benefits and downfalls of both models.

How nearshoring service models can benefit businesses

What is nearshoring? 

Nearshoring (as well known as outstaffing) is a modern but not a newly-born approach of having a remote development team provided by the nearshoring vendor. The services are highly demanding among IT corporations as the sphere develops globally bringing new specialists to the game. The term ‘nearshoring’ contains decode in its name - near, meaning that the services are offered from the vendor in a close proximity to your location. 

This brings us two benefits: you don’t face time zones difference, and, as a result, the communication is maintained without causing inconveniences to both parties; you can travel to visit your nearshoring services vendor for business purposes. To make it more clear, let’s see acompany from Germany hiring a dedicated development team of three people in Ukraine. 

The process of recruiting candidates takes about 2-3 weeks as the market of IT in Ukraine is full of proactive and seasoned specialists. The communication between these countries is easy to reach as inconsiderable time difference allows them to set daily meetings without inconveniences, come for a business visit, or do video calls between the vendor and client.  

Nearshoring is able to open new horizons for your business: rich pool of tech talents, dedication and loyalty, desired level of quality, skills, and experience, affordable services. Moreover, the model of nearshoring differs from outsourcing in a way that the first one presupposes you to take control of your project’s operations, team management, and solving technical issues, just like how you would manage your in-house team of developers. 

This approach allows you to maintain projects’ stages of development and at the same time establish reliable and trustworthy relationships with the remote development team.  

Outstaffing and Outsourcing

For the companies who never practiced hiring remote development teams, the puzzling question is what to choose - outstaffing company or outsourcing. Here, the main focus falls on your managerial preferences: whether you are ready to give all control to the vendor or you would rather do this on your own.  

Outsourcing – a practice of transferring a project to the vendor where all responsibilities and control are carried by the vendor. Yes, they can do it better, faster, and cheaper. Mostly, companies who use outsourcing services source out the subsidiary projects which are less crucial for the overall business; thus, they can direct their resources to handle more important projects by their in-house employees. This benefit, eventually, gives them the same quality, reduced time on delivery, and lowers their expenses. Risks? Having a 3rd party do all the work leads to quality issues, failed deadlines, communication pitfalls, hidden costs, and turnover within the team.  

Outstaffing/nearshoring – similar to outsourcing in a way of letting specialists of the vendor do the project operations but having full access to the team. Typically, you need to have your CTO (Chief Technical Officer) to control the technical aspects of the project and manage a remote team. You, in turn, collaborate with the CTO to know the technical details, set the meetings with your team, schedule face-to-face visits, and receive reports as well as feedback from your remote developers. 

An outstaffing agency does the recruiting stages, provides best office supplies for your team’s comfort, and offers them perks to make sure their needs are met. And which is even more important - it handles all retention issues to make sure your team is happy and loyal. 

Who are these models for?

A typical client of nearshoring services can be any company - from a startup to a large-scale enterprise. Let’s clarify the driving reasons of nearshoring for different types of companies. Startup – a recently set up company with a small number of employees, probably no office space, and, most importantly, shoe-string budget. This initial lack of resources brings the founders to the brainstorming stage – how to organise business operations, where to hire specialists, how they can save costs on a variety of services, how to invade the market with limited resources. 

Now, the answer to why startups are inclined to nearshoring is simple - they considerably save costs on recruiting, as the vendor’s recruiter searches for candidates, conducts initial interviews, gives test assignments; office maintenance, as the remote development team is operating from their office; and salaries and taxes for developers, as if comparing the Netherlands and Ukraine, you will be surprised by the difference in salary rates to build a remote team. 

SMEs and large-scale business means having a number of departments, ever-increasing needs for quality improvement, and constantly expanding teams for company’s growth. At a certain stage of their development they realise that they need more quality specialists and often the price is not the issue. Since some countries, despite their developed economies, have a limited pool of professionals, the companies start researching the ways to hire them from other countries. Eventually, they end up hiring several teams and take the best out of the professional side of remote development staff members.  

Key points

By carefully analysing the needs of your company and deciding on the requirements for specialists, you are able to make a clear choice on the nearshoring services type. With nearshoring, you get a professional remote development team to deliver excellent quality of services, reliable communication, and prolific collaboration. You benefit in saving costs for recruiting and retaining as well as paying the salaries for the employees.

Nearshoring also means no issues in visiting the team to establish trustworthy relationships, discuss critical questions, and get to know with each other in person. Despite the model you choose, the vendor will perform the recruiting routine, provide the best available candidates with the required skills and experience. It just depends on how much control you want to have and if you possess the expertise to manage the team yourself.