When starting a cooperation, it is crucial to identify your organizational needs. You can choose between two IT outsourcing models, as proximity and distance significantly impact the decision.
Let´s get to the point! What are the main differences?
Traditionally, project offshoring has been common. This model involves relocating business operations to distant locations. This means that companies in EU or America offshore their IT projects or operations into locations such as India or Bangladesh. Offshored projects or departments are run in different time zones, languages, and cultural settings. Seems good? Despite countless advantages (such as cost reduction), long-distance relationships might suffer and be very challanging.
On the other hand, nearshored projects are modern alterantives that offer significant advantages over the traditional approach. In this case you and your team get to work with teams in nearby countries, usually able to meet you occassionaly, talk smoothly without any challenging communication moments and/or cultural misunderstanding.
What are the advantages and drawbacks talking about nearshoring and offshoring?
Think about big US corporate companies such as Accenture or DHL. To drastically reduce their costs of customer support or other important departmens and operations they decided to offshore them to foreign distant countries. The key benefit of this business decision made the reduction of the costs of almost 30% to 50%, access to huge IT talent pool and specilized IT skills. They key goal is to reduce the costs while maintain the efficiency.