What’s the difference between Nearshoring and Offshoring?

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Nowadays cost-cutting is not the most important business driver for outsourcing.

Together with growing investments in technology, the approach to outsourcing is changing. Cost-cutting is not the most important business driver any more. Nowadays, it is rather about partnering and taking responsibilities for the processes, which are jointly managed. It is also the new way to access expert knowledge and gather a talent pool necessary for the project to succeed.

Thanks to opportunities like these, results can be obtained and delivered quicker, in a cost-effective manner and without loss on quality.

However, outsourcing is an extensive term for this type of collaboration, so you should recognize a few types of outsourcing. Today, we will take a closer look at the difference between nearshoring and offshoring.

Nearshoring is a type of outsourcing where a given company seeks a development partner in close proximity. This model is preferred by those who do not want to struggle with a cultural differences, language barriers or different time zones (collaborating companies often work within the same time zone), as well as different law and data regulations. Proximity also favours travelling and frequent face-to-face meetings, so no wonder that nearshoring is becoming increasingly popular among companies.

On the other hand, offshoring is a kind of outsourcing that makes the most of distance. Choosing this business model, companies are ready to cooperate with partners from different time zones, those speaking different languages or maintaining a totally different work culture. The best example can be when Western and Eastern European companies tend to choose India, Bangladesh or the Philippines. Why do companies decide on offshoring? The reason is simple – primarily in order tolower costs Even though it results in significant savings on any particular project, it can also raise some problems and obstacles such as communication barriers or difficulty to solve problems in person. For many, such barriers may cause delays, misunderstandings and, in worst case scenario, failure of the project. For others however, offshoring seems to be a perfect solution for advanced projects they need external expertise for.

Which one to choose? Well, it is solely up to you, but before you make a decision and step into outsourcing, we do recommend that you check all of the possible factors that can impact your project. If you are not sure that this solution can work wonders for your brand, check Start Nearshoring– a knowledge base for IT executives which may be the answer to your doubts and outsourcing related questions.

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