Nearshore vs offshore IT outsourcing

in Team as a service, Big data analytics, IoT, AI, IT strategy, Blockchain, IT outsourcingBy Carlos Camara, Managing Partner

We are currently living through a time of great digital transformation. Changes in our society are happening faster, and decisions are becoming increasingly complex.

Naturally, this digital transformation has put extreme pressure on access to the best talent for software development. In the global market, there is more demand for high-quality software engineers than what the market can supply. Additionally, there are also profound changes in business models and in technology itself.

As a result, we’ve seen the emergence of different development solutions that allow organizations, from across all types of sectors, to access the technical innovation needed for their products.

One of the tools that enable this differentiation is nearshore software development. Nearshore is a new, high impact approach to remote software development. As a technology partner for many businesses across a variety of industries, Hexis Technology Hub is able to scale teams, accelerate change and drive growth.

What is nearshoring?

Nearshore software development is the practice of getting work done or services performed by highly skilled specialists in neighbouring countries, rather than in your own country. Nearshoring provides cost-efficient, immediate access to sophisticated technology and also the agility to quickly increase software production capabilities, as required, while simultaneously keeping costs low.

As a nearshore software development partner, our clients have to access the brightest software engineers, organized in highly efficient teams, managed with the best HR processes.

Which companies use nearshoring?

Hexis Technology Hub in Portugal has helped clients all over Europe to solve their complex business problems by taking on the entire technology side of their projects and delivering bespoke software solutions to them. Recently, we:

Partnered with global FMCG brands based in Germany to gain insight into their consumers’ behaviours and added a competitive advantage to their products with IoT, big data and AI.
Supported UK fintech and blockchain companies with apps and MVPs that transform the gaming, retail and education markets.

For companies that have their own in-house software development, we’ve also helped these clients to achieve their goals faster by extending their teams. This is the provision of a dedicated team of Hexis software specialists that are controlled remotely by the client, to work alongside their in-house developers, with an aligned vision and commitment to the project’s goals. We have provided extended teams as a service for:

Scaling up IT companies that offer fully managed CTO services to their clients.
Online retail giants in order to enable regular software innovation.

The other unique benefit of nearshoring through extended teams and customised software solutions is the ability to offer fresh perspectives and ideas to our clients. As a nearshoring specialist, our niche and passion is tech innovation. We’ve partnered with startups to global corporations, from all sectors, to incubate new ideas in our tech hub that boost digital disruption for change and market transformation.

They’re very loyal and they have the expertise to pull off a broad range of projects. Bhairav Patel, Director in Atom Ventures

See our client reviews on clutch.co.uk

Is nearshore a way of outsourcing software development?

In a way, yes, but nearshoring is much more than just simply outsourcing. IT outsourcing (as a part of an outsourcing definition) is the use of external service providers to effectively deliver IT-enabled business process, application services and infrastructure solutions.

The benefits of nearshore go beyond tech outsourcing. We’ve helped clients to develop the right strategies and vision, structure the best possible contracts, and govern deals for sustainable win-win relationships with external providers.

Nearshoring can enable enterprises to reduce costs, accelerate time to market, and take advantage of external expertise, assets and/or intellectual property.

What is the difference between offshore and onshore for IT outsourcing companies?

For our European clients, the overwhelming benefits of nearshore outsourcing versus offshoring is the close relationship between their country and Portugal, where we are located.

When choosing a nearshore partner our clients look for a similar time zone and a short flight distance, if they decide to visit our HQ. Because of this, many of our UK clients choose Portugal (GMT+0) to outsource their project.

In the case of offshore outsourcing, there are many drawbacks. There are little, if any, closeness or similarities between the client’s country and the service country. These issues include a significant time zone difference, some language barriers and even cultural differences, which can impact the quality of the work, the vision of the project and the commitment of the team. Practically, there can be issues with commercial laws, intellectual property, data protection and the difficulty to travel (visas, travel time, more expensive ticket fares) if and when, it becomes necessary to do so in order to manage the outsourced team.

The development is going better than expected. Asif Rajani, Founder & CEO in Regvolution

See our client reviews on clutch.co.uk

But does traditional offshoring lead to cheaper, faster software?

Offshore outsourcing can be an attractive option. The low cost of teams' scalability with flexibility, can generate benefits to the end client.

However, the top problem with the majority IT offshore software development model is low staff commitment and moral. With high turnover, staff leaving projects leads to team instability and loss of knowledge. The compound effect of these issues negatively impact projects in terms of time and money.

Additionally, there are other hidden costs that quickly surpass the initial perceived values of a cheaper outsourced team. Clients of these traditional offshore companies invariably become dissatisfied with the low-quality outputs, discovering the need to spend time and money to visit these offshore countries and micromanage their teams.

However, as a Portuguese company, Hexis is culturally aligned with our European clients, ensuring top quality software from autonomous, reliable teams. We address all the shortfalls of the traditional IT outsourcing offshore model, and share the same time zone which supports regular communication and rapport with our clients. They have full confidence in our work and winning their trust is the key to our relationships.

The benefits of nearshoring

Nearshore outsourcing is uniquely positioned as the best business decision for European clients, as it provides access to high-quality talent, rapport through cultural proximity and the use of the best technology practices. Additionally, geographical proximity and time zone overlap also make communication easier.

Apart from facilitating the fast, sustainable scale up of engineering teams, Hexis also has a knowledge management framework that guarantees the safety of our clients' intellectual property.