Outsourcing has become a great alternative business strategy for companies all over the globe over the past years. Global outsourcing revenues have continuously increased in the past decade alone. Not only has the consumption increased, but the breadth of services offered as well. Outsourcing has grown beyond simple business processes and has encompassed a number of in-demand technologies of today.
There are numerous benefits to outsourcing, such as low costs and access to a global talent pool. There are different ways to approach outsourcing alternatives. Each outsourcing strategy has its pros and cons. However, we found that of these strategies, nearshoring is the most balanced. It is best to consider certain factors and decide on the ways to best employ this strategy.
For this article, we will focus on the nearshoring definition, elaborating on the reasons why nearshoring is the best outsourcing option, and how prevalent outsourcing and nearshoring services worldwide.
The Best Option
Nearshore outsourcing delivers to consumers the most balanced option. The nearshoring strategy enables consumers to outsource their processes and projects to software development companies within similar or close time zones.
Companies can save more with cost-efficient communication and lower operational costs. Added to this, nearshore software development services offer the same quality development services outsourcing. Nearshoring outsourcing can also be employed to develop and support technologies such as AI, Cloud Sourcing, and Data and Cyber Security.
Advantages to Nearshoring Services
Numerous companies have leveraged the capabilities of nearshoring services providers. Nearshoring services offer a broad spectrum of services at a more manageable cost. Services and dedicated teams are also more accessible to customers. Companies in Switzerland, Spain, and Germany have found benefit from collaborating with Easter European nearshoring services providers.
- Render lower operational costs. Companies have found that nearshoring services are greatly cost-effective. It is less expensive compared to offshoring services and can provide more options for closer communication and monitoring.
- Provides a faster development turnaround. Companies can work more closely and effectively with the development team in fast-tracking projects. Feedback and continuous improvement and development are faster.
- Present more options for developer interaction and project oversight. Minimal time zone variation and closer cultures empower customers to be more proactive in communicating and collaborating with nearshoring services providers. Traveling, communication and dedicated team interaction are more manageable for customers.
- Provide access to a convenient global talent pool and resources. Outsourcing provides customers access to a global pool of skilled dedicated teams. Nearshoring software development services ensure that these global dedicated teams are closer to home.
- Better organizational management focus. Nearshoring services provide the customer with the opportunity to give more focus on managing internal and improving organizational processes.
- Diverse technologies. Nearshoring services offer great quality software development services. Projects leveraging technologies such as Cloud Computing, Information, and Data Security, Artificial Intelligence (AI), Robot Process Automation can be completed by dedicated development teams for nearshoring services.
Nearshoring Outsourcing Consumption Around the World
In 2018, the total global outsourcing revenue reached to 85.6 billion USD. The Americas, Europe, Middle East, and Africa alone account for 44.7 billion US of the total global industry revenue. This trend is predicted to continue growing as demands for technology and automation increases.
With this increasing consumption of outsourcing services, it is evident that companies and various sectors all over the world are embracing the benefits of outsourcing services, including nearshoring outsourcing services.
Approximately 84.2% of the outsourcing collaboration has originated from companies based in the Americas. According to the Global IT-BPO Outsourcing Deals Analysis Report, The top 5 countries in the Americas with the highest number of outsourcing deals are as USA, Canada, Mexico, Peru, and Brazil. Companies based in countries with high over IT outsourcing services cover 47% of all the outsourcing collaboration and deals generated in the Americas in 2017.
The companies, institutions, and organizations with the most number of outsourcing service users come from the Government, Defense, and Insurance sectors. Companies from these sectors have greatly benefited from nearshoring services provided by companies closer to their geographical area.
Europe, Middle East, and Africa
Following the United States, companies based in Europe are most likely to employ outsourcing services, nearshoring services included. The top 5 European countries with the most BPO collaboration are the United Kingdom, Spain, Denmark, Netherlands, and France. Swiss companies have found that nearshoring to be a more reasonable and profitable option and were able to save up to 75% of their total costs by employing nearshoring services.
IT outsourcing services in Europe, the Middle East, and Africa account for the highest percentage of outsourcing collaboration, reaching around 80%, and followed by Business Process Outsourcing. Institutions and organizations from the Government, Telecommunication, and Banking sectors have the highest number of outsourcing services consumers.
Asia and Oceania
Not to be left behind, companies and institutions in the Asian and Oceania regions have also taken part in this move towards employing outsourcing services. Australia leads the charge in embracing the outsourcing services. And then followed by India, Russia, Hongkong, and Japan.
87% of the outsourcing collaborations in Asia and Oceania regions in 2017 were attributed to IT outsourcing services. Telecommunication companies and institutions were the highest outsourcing consumers, followed by companies in the Government and Defense sectors.
Closer to Home
Companies all over the world are exploring the services and benefits of nearshoring services. It is best to take advantage of the opportunities that are closer to home, especially when these opportunities offer higher quality products at a lower cost and better collaboration environment.
Instead of hiring skilled dedicated teams from across the globe, European countries have tapped into the skills within their region. Nearshoring services providers in countries like Ukraine, Poland, and Romania have shown to provide both affordable and expert skills.
Companies based in the Americas would best benefit from employing the services within their region, as opposed to hiring the services in companies based in Asia. Companies based in Europe, such as those based in Switzerland, Spain, and France, would best benefit from collaborating with nearshoring companies based in Eastern Europe.
There are alternatives that you can consider, such as hiring in-house developers or offshoring to farther countries. Choose the option to
fit your needs and best benefit your organization. Choose wisely.