Offshore

This first model refers to the outsourcing of IT services in a foreing country, different from the one of the contracting company.

Characteristics 

Through this modality, priority is given to cost reduction and companies located in more affordable regions are chosen, usually in continents such as Africa, Asia and Latin America. A company could get to choose this model whenever, in its case, development budget is an important parameter.

A factor that must be taken into account is language, for it, it is important that the hiring company evaluates the provider’s language and determines the impact that the knowledge level in the language would have in the communication, such as English.

According to Education First’s record, english domain is gaining momentum in Latin America, in 2019, 12 of 19 latin american countries included on the record improved their language domain and 5 of them improved significantly. 

With this model, it is also important to have local laws in mind, which rule the relationship between the company and the provider, since they are usually different in each territory. 

Time difference is another defining factor for managing the work between the companies that establish the relationship. If you have a company in the United States, one of the advantages of working with a company in Latin America, are the timezone similarities. Sometimes, when real time cooperation with the team is necessary, the minimum differences make the job easier and more convenient.

When there is a wide time difference, delays in progress and project deliveries can come up. Schedules and working hours will depend on the company’s goal.

This outsourcing is an increasingly used option by companies when it comes to hiring personalized managed IT services, since it can provide several benefits.

Onshore

Implies outsourcing of a service provider located in the same country as your company’s, to provide IT related work whether it is on a remote or on-site way.

Characteristics 

In this model, local teams are easily accessible, they speak the same language, live in the same time zone, share the same customs and culture. There is a greater accessibility, even though that can also be due to possibly having higher costs. 

It offers the opportunity for internal directors to easily evaluate the employee’s work, besides not being too far away, in case any issue comes up.

Within the Onshore you can also opt for an onsite or offsite model. The first one means that the subcontracted employee or team will work in the offices of the client himself. While, in the second case, the contracted provider is the one responsible for providing the space at their offices, among other agreed services.

Nearshore

This model refers to subcontracting a company provider of IT services located in a close foreing country, located on the same or similar timezone as the contracting company.

Characteristics

Nearshoring is possibly the most popular software outsourcing model nowadays because it combines characteristics from offshore and onshore. This model allows the communication not to be too affected, the cultural comprehension to be similar and that strong outsourcing relationships are built between companies.

Finding highly qualified nearshore teams is easy but you must be willing to see a horizon of possibilities. In case you need to travel, it’s usually more affordable and fast, which is why it is possible to establish a more stable cooperation between companies. 

In nearshore recruitments, since allied companies are located in close regions, they usually handle common cultural codes and even share the same language. 

This model can also represent a cost reduction compared to an onshore provider. 

Taking a decision

There is not a model better than the other. There are advantages and disadvantages in offshore, nearshore and onshore outsourcing, but those will only depend on the goals you have set. It is impossible to say only one method is preferable among the others, since everything depends on what you want to achieve, because outsourcing offers several opportunities for companies that plan on outsourcing.

Actually, the hardest decision is to choose the right provider, the one that fits your pocket best and that at the same time, has enough knowledge and experience to design and develop the projects you need. More than a provider, it must be a partner willing to stay updated and  successfully contributes to your company.

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