Nearshoring is a derivative of the business term “offshore outsourcing”, in which various business processes are relocated to foreign, lower-wage countries that is relatively close in distance and time zone than more traditional offshore locations.The general idea behind the concept is to reduce the complexity and risks associated with remoteness between customer and provider in “traditional” offshore model and to leverage proximity of the Nearshore destinations with fewer language and cultural barriers and no time zone differences.
Although it is difficult to compete against cheap labor costs in Far East locations, there are a number of reasons to make Nearshoring more attractive alternative:
1. Time Zone
Nearshore outsourcing offers an alternative of having a developer or support team working in the same time zone. This is critical element in engagements where online interaction is a must. Nobody needs to wake up early or stay up late at night to complete the task; after all it has a significant impact on productivity.
2. Geographic proximity
If company expects world class delivery by outsourcing a project to a distant country it has to think about frequent traveling demands as tasks cannot just be handed over to several thousands of miles away, and face-to-face interaction is vital.
Taking an hour flight between major European cities to attend a project review session is different from taking many hours trip across the globe where the costs are not the same either.
In addition to low-cost flights all over the Europe gives an opportunity to make additional savings. The trip to the nearshore outsourcing development company can cost the same money as visit the neighbor city.
3. Cultural Affinity
Language, sense of humor, similarity of school and university education and common history in neighboring countries have always been important cultural elements of successful interactions and directness of communications.
4. Intellectual Property Protection and Visa advantages
Visa issue is important point taking into account the necessity of significant number of business trips. In nearshore model in most cases you need no visa for travelling. There is only one step between the decision to visit your outsourcing partner and arrival: buying a ticket for a flight.
In addition to the mentioned immigration advantages, EU legislation also provides complete protection of intellectual property rights. This is a critical component when sensitive proprietary information needs to cross as a result of the nearshore engagement.
5. Strong technical skills and scientific background
Eastern European countries historically have strong technical background, solid scientific basis and skilled technical staff with a solid background in mathematics and good knowledge of foreign languages.
Eastern Europe has highly efficient school system that adds thousands of skilled labor every year to its professionals, for example The Soviet Union's solid legacy in the fundamental sciences provides students with a strong education in numerous technical disciplines. According to the GoalEurope, there are 30,000 IT graduates only in Ukraine every year. With government commitment to the industry there is highly skilled labor force with minimal socio-cultural differences found in CEE countries.
6. Costs Advantage
Proximity between parties provides with lower costs interaction allowing for Project Management to be more present in the project, cultural closeness also makes easier communication thereby reducing time to reach a conclusion. Time zone aspect eliminates the need in extra work. And as a result of all this the hourly rate difference between Nearshore service model and “traditional” Far East offshore model (e.g. software development in India or China) is eliminated and real costs match.
Combining on-site presence of software architects and project managers with off-site development teams who shared cultural values and have similar mindset, Levi9 Global Sourcing helps leading European businesses to substantially reduce costs under the highest standards in software development and IT maintenance.
