Outsourcing, Nearshoring and Offshoring. What’s the difference?
Outsourcing has many names and guises. The term is used in almost every area of business. But what does it mean? Are there various kinds of outsourcing? When is it worth trying? Read the following article to find out more.
What is outsourcing?
Outsourcing is contracting another company to complete particular tasks for you. In the article dedicated to management and organisation, it is defined in various ways.
However, it is highlighted that outsourcing is a method of reducing the scope of the tasks of an enterprise and entrusting an external partner to accomplish them. Outsourcing may be dedicated to components, individual tasks, functions, business activity processes, or even product modules[1].
From the companie’s point of view outsourcing is based on commissioning an external company to perform certain tasks, e.g. the maintenance of the system, creation of particular products or particular activities and tasks that may be related to hiring personnel.
While choosing IT outsourcing, a company may focus on the remaining activities and expand them without wasting time and assets on recruiting IT specialists.
With outsourcing, a company has constant 24/7/365 IT support. The company does not have to hire therefore saving money, money that can be used in other areas of the business.
Very often, terms such as nearshoring or offshoring are used in connection with outsourcing.
Nearshoring, offshoring…what’s the difference?
Very often we can see the terms nearshoring and offshoring which replace the term outsourcing. Both these terms define specific types of outsourcing. The basic difference between them is the location of the people who provide the given services.
Offshoring…
The benefits of offshoring may be similar to those of outsourcing. Unfortunately, due to significant cultural differences, communication problems or the economical and political situation in the region the interest in offshoring is decreasing as it does not yield the expected results.
Nearshoring….
Due to the increasing problems related to offshoring companies often choose nearshoring. Similar to offshoring, it is contracting to companies in foreign countries. However, the basic difference is that these companies are in a close convenient proximity in the same cultural area. Therefore, when remote communication is insufficient a face to face meeting can be arranged. Companies from Great Britain, Germany or France are increasingly employing companies such as ours, located in Poland. Therefore, they can decrease their IT costs. Acquiring a new business partner that speaks their language, has a similar culture and understands their business needs.
Why is it worth outsourcing?
IT service outsourcing can be beneficial for any company regardless of size. The lack of desire to create a team and employing specialists may yield enormous benefits – both financial and organisational. Here are some examples for when it would benefit to choose outsourcing
When is the right time?
- The lack of human resources in a company – when deciding on outsourcing, you gain access to qualified IT specialists that meet Your needs in a short time. Finding such individuals on the market often takes longer, is expensive and does not always yield the expected results. Therefore, if you’re looking for particular specialists or an entire team and you want to acquire them in a short time choose the support of an external partner.
- The lack of appropriate knowledge in the company – the IT specialists being within easy reach is not the only advantage of outsourcing. The knowledge and experience within the areas of various projects and technologies are exceptionally important and of great value. Therefore, if you are planning to implement a new system in your company and you need qualified personnel make the right choice for your company, choose outsourcing. Companies such as ours have completed hundreds of projects similar to yours. We know what the most common problems are and how to avoid them and bring your project in on time and budget.
- The lack of a timely reaction to additional needs within the IT area – the competition breathing down your neck, constantly implementing technological variations and your team is unable to implement the changes as fast as you would like them to? In a situation like this you should also consider outsourcing. Due to the immediate and easy access to your team and their constant availability – Depending on your requirement – you can implement any changes and system updates on a daily basis.
We hope that after reading this article, the concept of outsourcing has become a little more clear. How to best prepare for its implementation into your company?
We shall discuss this in our next article…
[1] M. Matejun, Zeszyty Naukowe Politechniki Łódzkiej, Organizacja i zarządzanie, Rodzaje Outsourcingu i kierunki jego wykorzystania
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