Nearshoring: A Smart Alternative to Offshoring

In today’s cost competitive environment, it’s not what you sell it for but what you buy it for that makes the real difference to your bottom line. As a result, more and more companies are turning to business process outsourcing for receiving their desired cost efficiencies. By transferring non-core business activities to third party organizations, a company can focus on their core competencies and still receive superior economies of scale for their complete product showcase.
 

Nearshoring: A Smart Alternative to Offshoring

Traditionally, organizations look to offshoring to cut costs for outsourcing services. As economies shift, it is becoming less cost effective to implement offshoring services and companies are re-evaluating their outsourcing strategies. Offshoring is becoming a less common practice due to the difficulties in project management, longer lead times, complex transportation logistics, different time zones and overall costs. There has been a shift to favour nearshoring to improve project cost and management.

So why consider Nearshoring? Nearshoring is becoming a more prevalent option for many growing industries as the advantages of offshoring are diminishing. Many organizations are favouring geographical proximity, speed to market and lower costs as a more strategically beneficial option. By nearshoring with neighbouring countries, an organization is likely to avoid language barriers and cultural learning curves. Outsourcing closer to home will bring down any travel costs, which often isn’t taken into consideration with offshoring. Financially and logistically, many organizations are favouring nearshoring as a business strategy.
 

The Real Perks of Nearshoring

One of the biggest benefits to nearshoring is geographical proximity. For instance, in the United Kingdom, European countries even closer (typically Spain) are becoming increasingly popular for nearshoring services. The belief that offshoring is a cheaper option is diminishing, as hidden costs and timely delays associated with offshoring are becoming apparent. Nearshoring services much closer to home is expanding as a strategic alternative to offshoring over the next few years. With nearshoring to European countries, services are likely to be in the same or similar time zone and you can have more control over the process without timely delays, making overall communication much easier. This major benefit helps facilitate better collaboration and quicker response times, in addition to project interaction and lower traveling costs.

Nearshoring services are proving much less costly that an offshoring alternative. Many organizations have discovered the hidden costs associated with offshoring. Travel expenses, supply chain and hidden costs the overall cost can ultimately make offshoring a much more expensive option. With outsourcing much closer, many of those costs are eliminated. Outsourcing services can be a critical decision in saving your organization time and money. Many organizations are favouring nearshoring due to cultural similarities, shorter travel distances (thus less traveling costs), shorter lead times, better supply chain control and overall communication. Fewer logistical, cultural and language barriers exist. It’s becoming a more sensible alternative to nearshore services to a neighbouring country instead of thousands of miles away.

A Final Note

Once again, whether onshore, offshore, or nearshore outsourcing is more beneficial for your company really depends on your priorities, but there is one option that I haven’t discussed yet that is usually discussed as part of nearshoring. I’m talking about Spain. Outsourcing to Spain is a unique way of outsourcing because it includes more benefits than any other nearshore or offshore company can offer. 

Nearshoring offers a mix of onshore and offshore benefits. It decreases your cost while still providing you with some of the perks of onshore outsourcing such as regular communication during business hours. In price, the usual hourly rate may be higher than the offshore rate, but you will save money again through more efficient communication and lower travel costs. 

BABEL are an established, financially secured technology and IT services company with global reach. Headquartered in Madrid, we have 15 years´ experience in delighting our customers and with the geographic and cultural proximity, along with proficiency in English. We are proactive and fully responsible for every project delivered, as well as able to adopt a risk-shared, cost-saving and agile approach. Our Nearshore Software Development Service combines the talents of our highly skilled technical development staff with sound business domain knowledge, and the latest development technologies and methodologies, to bring excellence, quality, and cost-effectiveness to your projects.

Working in our delivery centres in mainland Spain (Madrid, Barcelona and Seville) and at customers’ sites, we deliver at any stage of the development life-cycle. We provide entire dedicated teams carrying out the whole project, joint or co-located teams, or individual expert developers to fill gaps in your in-house teams. We offer full resource scalability responding to your changing needs over the lifetime of the project. Each project is carefully customised to fit your unique business and can be combined with other BABEL services such as IT Consulting, Maintenance and Support.