Between 1980 and 2010, Offshore Outsourcing was dominant. Today, Offshoring is getting less common because of complex transportation logistics, complex projects requiring technical expertise, project management, different time zones and overall costs.
If you’re an OEM, you’re probably familiar with Nearshore outsourcing, or you may even be considering it. With advances in technology, economic shifts, and the impact of the pandemic (including a shortage of technology talent), the concept of Nearshoring is gaining ground. There is a shift towards Nearshoring to stay on top of technological progress and innovation, and to ensure better security, cost and project management.
Nearshoring, Offshoring and Onshoring are the three most common outsourcing models. In order to understand what Nearshoring is, we will start by demystifying the three forms of outsourcing and try to explain why today, organizations are turning towards Nearshoring to improve project cost and management.
1. Nearshore vs Offshore vs Onshore
The difference lies in the geographical distance between the country where the client company is based and the country where the service provider is located.
Offshoring means seeking for a software development partner outside your company’s country. Offshoring usually refers to the lowest cost locations, such as India.
Onshoring means “domestic” outsourcing. It involves transferring your company’s software development to a more affordable location within the same country.
Nearshoring involves working with a software development partner who, although located outside the client’s home country, is about three time zones away. Nearshoring is mainly used to find highly skilled and specialized developers. One of the advantages is that engineering processes are similar, resulting in less risk to the overall project and better quality work. Besides, Nearshoring is more cost-effective compared to in-house development.
Each outsourcing method has its advantages and disadvantages. Each country is also more or less specialized in one area or another. The choice must be made according to the needs and the situation of each company.
When it comes to deciding on the right type of outsourcing for your project, there are three aspects to analyze :
- The costs to hire an in-house workforce versus an outsourced one;
- The level of expertise needed to make your project a success;
- Your ability to be flexible to involve an external team to your existing one.
But the pandemic has changed the way we do business. Today, work is done virtually, so these concepts now have less defined boundaries and sometimes overlap. Once again, choosing your type of outsourcing all depends on the projects and the expertise needed.
2. Is Nearshoring to Canada the right solution for your OEM?
IT Nearshoring has taken on such a significant role for businesses today. US companies are hiring Canadian IT talent for a variety of reasons including cost, expertise, proximity and tech talent shortage, mainly triggered by the Covid-19 pandemic. Let’s explore the main benefits of Nearshoring to Canada.
Time zone difference : The United States and Canada share the same time zones as they are located next to each other. Overlapping time zones make it easier for companies to participate in cross-border collaboration and video conferencing.
If you have a team of software developers working for you at the same time, it will be easier for your entire team to collaborate during working hours.
They are geographically close : One of the major advantages in working with Canadian developers is the closeness in time and distance. Canada’s three major technology hubs, Montreal, Vancouver and Toronto, are close to some of the largest US cities.
Similar work culture : While you often face language barriers, time differences and different legislation when choosing offshoring, you will have no concerns when choosing Nearshoring. No major time differences and the ability to communicate easily with your team throughout the day.
Canadian expertise: The three major tech hubs in Canada keep evolving with the emergence of many tech startups and innovation hubs, providing developers with access to the latest technology developments and tools in AI, IoT, augmented reality and more.
Geographic proximity, similarities in business culture and law, and political stability in Canada make outsourcing easier and more cost-effective than in-house development. Nearshoring allows you to achieve a significant reduction in operating costs.
Above all, the pandemic has accelerated organizations’ efforts in digitizing their operations to meet the “new normal” of hybrid and flexible work arrangements. So you can easily work with the best resources.
3. Is Nearshore Software Development the ideal solution for OEM?
Nearshore software development means working with partners who will help you increase your overall development and get you to market faster, adding value and allowing you to profit from the latest technologies.
But how do you know if an outside engineering services provider is a good fit for your company? In order to answer this question, there are a few things to consider such as the technical skills required, the degree of communication or the level of flexibility you need with your partner. If this question is running in your mind, we’ve written a full blog post on the subject, “Engineering Outsourcing: 6 Key Considerations.”
There is no one-size-fits-all model for engineering outsourcing. Whether you need access to talent with specific skills to speed development, or to reinforce your in-house team for a special project, engineering outsourcing may be the ideal solution.
At Orthogone, we have created a product and solution development group composed of resources specialized in addressing complex challenges. Our unique business model addresses these challenges. We address a critical issue of staffing shortages, but more importantly, we increase the level of product innovation and functionality for our customers.
To learn more about partnering with Orthogone, contact us.