Why are Tech Companies Nearshoring their IT?
At a time when communication is increasing, national borders are becoming less significant and tech is expanding, we’re seeing a fascinating change in how tech companies function. Today, outsourcing is spreading past the realms of customer service and into the world of IT. A department that was once solely internal is expanding past borders in a peek at a new reality: nearshoring is the new law of success.
So why are so many tech companies outsourcing their IT needs? We explore the reasons behind this change.
Nearshoring and Offshoring
Before we dive into the reasons, it’s important to understand the different models of IT outsourcing, nearshoring and offshoring.
Nearshoring is the outsourcing of a business process, particularly information technology, to companies in nearby countries. Often, they share a border with the target country. The proximity may mean benefits in terms of similar time zones, and cultural, linguistic, social or historical linkages.
Offshoring, on the other hand, is the relocation of business process to another country regardless of the type of process or the proximity of the destination country. This is the usual standard for customer service outsourcing.
1. Cost attractiveness
It was no surprise when corporations outsourced their customer service process abroad. After all, the international customer service agents were far more affordable in developing countries.
Although traditionally seen as an internal department, the same is happening for IT needs. With today’s internet connections and ability of access, there is no longer a need to have staff on-site.
This reduction in production costs is an attractive measure for any company looking to improve profitability, as salaries tend to consume a significant portion of a company’s budget.
This is a particularly popular movement in Europe, where nearshoring services between larger and smaller European economies is on the uprise. The developing nations of Europe offer a low-cost, skilled labor force while remaining in close proximity and similar time zone to the larger economies.
2. High qualified professionals
Any nation will have a limited number of professionals suited for high-skill positions, and this is the reality on-ground for many companies. There are far more positions available than skilled personnel for hire, leaving many companies in desperate need to fill their empty positions with IT professionals.
IT outsourcing companies are filling a gap in the hiring market by offering highly qualified professionals to fill the roles required by thousands of companies. The employees of the IT outsourcing companies are experienced IT graduates with a solid background and ample technological knowledge.
This is where the nearshoring model comes in handy – the professionals also tend to be multilingual and are thus able to communicate with company staff from neighboring countries with a similar culture, history and language.
Offshoring also provide highly qualified professionals for the role, but there could be a communication barrier in terms of language, so it adds an extra layer of complexity to the process.
3. Good quality service
Combined with a pool of professionals, IT outsourcing companies offer a quality service that meet high requirements for a variety of tech industries. The services are usually tailored to meet the needs of specific industries, such as biotech, fintech, eCommerce and telecom.
Additionally, the services can be acquired for long-term needs or individual projects, depending on the company’s needs.
A great example of project delivery done right is by JCommerce, one of the IT outsourcing leaders in the European Market. By offering support at every stage of a project, including the consultation and idea phase, they are able to bring an IT project from start to finish.
This includes signing Non-Disclosure Agreements to ensure a confidential relationship, the creation of a detailed project brief, and developing a project delivery process with proper communication channels.
By managing projects according to the agile methodology, company’s have a constant insight into a project’s progress. This transparent communication allows for consistent cooperation.
It’s that level of professionality and dedication to quality that has IT outsourcing companies like JCommerce growing in popularity.
4. No requirement to hire and train
HR departments know just how difficult it is to find specialized IT professionals to fill roles at a company. Companies are constantly competing against each other for this limited pool of professionals, and beyond the high cost of salary, there is no guarantee that an employee will stay long-term.
Today’s job market allows IT graduates to move from company to company with ease, so going through an expensive process of training for a temporary worker is financially difficult on a company.
By using nearshoring and offshoring services, companies no longer have to deal with the expensive stress of interviewing, hiring and training IT professionals. This is all handled by the outsourced company.
Instead, the hiring company can focus their efforts on other departments while entrusting the IT requirements to a professional company with hundreds of experts in employment.
All in all, with so many clear benefits, it’s reasonable why so many tech companies, particularly in Europe, are opting to nearshore their IT processes.