Every IT development project has different needs and challenges, so what works for some doesn’t work for others. Lower development costs continue to be the main driver for outsourcing IT development abroad, and with this comes the decision of choosing between going nearshore or offshore.
If youâ€™re looking to outsource a software project, and not sure when to choose which, weâ€™ve got you covered! In this article, weâ€™ll address the pros and cons of both nearshore and offshore IT development to help you decide which one suits you best.
What Is Nearshore Outsourcing?
Nearshore outsourcing is the practice of outsourcing one or more activities, processes or services of an organization to another country within the same continent and with the same or a close time zone. For instance, a North American company could offshore some of its operations to Mexico or Panama, and likewise a business based in the UK could have projects developed in Poland or Bulgaria.
What Is Offshore Outsourcing?
Offshore outsourcing is different from nearshore outsourcing in a way that the destination country is far in proximity from the home country of the organization. When a North American wants to offshore, it doesn’t go to Mexico or Panama, but to Asian countries such as Vietnam or India instead.
When To Choose Nearshore Outsourcing
Nearshore outsourcing is the practice of hiring vendors based in a neighboring country. Companies choose to nearshore because it brings the benefits of onshore outsourcing (frequent and easier communication, fewer cultural differences, etc.) at a lower cost. However, nearshoring has several cons, such as:
- Far fewer vendor options to choose from than offshoring.
- Limited pool and diversity of talents.
- Higher costs than offshoring.
So, when to choose nearshore outsourcing?
- When constant communication between project team members is the key difference between a successful project and a failed one.
- When regular on-site visits from both sides are necessary to launch the project and manage its progress.
When To Choose Offshore Outsourcing
Offshore outsourcing refers to hiring vendors who operate from far abroad. For example, if your business is based in the UK, offshoring is hiring a vendor based in Vietnam or India.
Companies choose to offshore because it offers many benefits such as:
- Access to a much larger number of options for vendors scale-wise and expertise-wise.
- Countries strong in IT outsourcing, such as Vietnam and India, can provide sizable teams for large projects.
- Much lower costs than nearshoring.
However, despite its cost and option advantages, offshoring is not the perfect solution for everyone, since it does have some disadvantages, including:
- Different time zones and greater distance can be detrimental to projects that require close and frequent collaboration.
- Different languages and larger cultural differences can also make collaboration challenging.
So, when to choose offshore outsourcing?
- When the cost savings are worth the challenges.
- When your project doesnâ€™t require frequent communication with your vendor.
- When you need a large team size, or fill in the skill gap that nearshoring canâ€™t bridge.
Top IT Offshore Outsourcing Countries For Businesses In The UK
Vietnam has been rising to be a powerhouse in the global IT outsourcing market in recent years. It currently has around 400,000 IT engineers working in thousands of IT organizations, and over 50,000 IT engineering graduates coming out every year.
Try some simple searches on Google, and you will find that Vietnam has landed its name on pretty much all lists of the best IT outsourcing countries in Asia.
Today many global high-tech giants, such as Samsung, Google, LG Electronics, are relying on Vietnam to fulfill their IT projects. In an interview with Reuter, Neill Fraser, an IT specialist from Google, said after having visited local schools in Vietnam, â€œVietnam has the highest-performing computer science students Iâ€™ve ever encounteredâ€.
The fact that Vietnam offers its outsourcing clients many benefits, from competitive pricing to highly skilled engineers, is the reason why itâ€™s been able to attract large flows of global customers.
Read more: Top IT Outsourcing Companies in Vietnam
While Vietnam is a rising star, India has been a seasoned veteran in the IT outsourcing industry. India is always in the top five countries that have the most STEM graduates in the world with more than 3 million of such engineers, and around 120,000 more joining its IT talent pool every year.
With its massive number of IT engineers, India is often the go-to destination for gigantic IT projects that require thousands of personnel.
3. The Philippines
The Philippines has its own advantages in the IT outsourcing market. The Filipino lifestyle has a nice blend of Western culture to it because of Americaâ€™s past colonization. Due to this cultural mix, the Philippines is now among the countries with the largest number of English speakers. These qualities alone can already facilitate the collaboration between Filipino vendors and their Western clients.
However, apart from its high frequency of climate hazards, The Philippines is enduring an ongoing political instability that results in mass protests, which is scaring off a lot of clients.
Top IT Nearshore Outsourcing Countries For Businesses In The UK
The Ukrainian government has placed a strong focus on IT education that has created a thriving tech industry in Ãt country. According to HackerRank, Ukraine developers have an average score of 88.7% over all HackerRank challenges. Also, Ukraine is home to the largest number of C++ programmers in the world.
Although English isnâ€™t widespread among the general population, 80% of Ukraine’s IT community speaks English well, so communication barriers are a minor issue here. Other benefits of nearshoring to Ukraine include a time zone that partially overlaps with UK times and a similar working culture which can help facilitate collaboration.
According to statistics from HackerRank, Poland has the third largest number of skilled programmers in the world. Polish programmers ranked first in Java assessments and were listed in the top five for other mainstream programming languages such as Python, Shell, and Ruby.
Furthermore, 30% of the population in Poland speaks English as a second language, which makes communication simple. When it comes to time difference, Poland is only 1 hour ahead of the UK, so meetings and collaboration between the two countries can be conducted easily.
Romania offers its citizens access to tuition-free education, which has developed the country into one of the most diverse tech scenes in Europe. Romania ranks 18th place on the A.T. Kearney Global Services Location Index, which ranks countries based on criteria such as financial attractiveness, skill levels, and overall business environment.
Romania is only 2 hours ahead of the UK, which makes it easy to schedule meetings. Up to 90% of the developer community in Romania speaks English, as well as many other foreign languages such as Russian and German, so communication with Romanian developers will not be a problem for UK businesses.
Is Nearshore vs Offshore Outsourcing Better For You?
Nearshore and offshore outsourcing have their own pros and cons, and you should weigh these pros and cons against your needs and limitations before deciding which approach is best for your project. With this guide and a clear understanding of your project, you will make the right choice!
We hope this article has provided you with valuable information. If youâ€™re looking to outsource a project to Vietnam and not sure how to get started, fill out the box below and our Sales team in CMCGlobal will be in touch shortly to advise!