What is the solution for the failed off-shoring approach? 

04/17/2018
Is near-shoring the solution for the failed off-shoring approach? 

Outsourcing IT services (and specifically software development) has proven to be a great approach for reducing operating costs and increasing flexibilities for companies to adjust resource allocation as business condition change. 

There are two categories when it comes to outsourcing IT services: off-shoring and near-shoring.

Off-shoring IT services is the relocation by a company of IT business processes to a distant location, normally in very different time zones, with significant cultural differences and important language barriers but with a very relevant benefit: significant cost effectiveness. 

According to some statistics by the Aberdeen Group, reducing IT costs is the primary motivation for outsourcing for 82% of companies in the U.S. However, as Aberdeen continues, almost 50% of outsourced projects fail outright or fail to meet expectations and a bit over 50% reported that outsourcer was not performing to expectations. On top of these enormous risks, the average cost savings for projects was a mere 26%. 

As a result, several companies have found that off-shoring has promised more than it has delivered, leading analysts at Gartner Research to dub 2004 the start of an off-shoring “trough of disillusionment.” 

Near-shoring is the little brother of off-shoring. It refers to outsourcing the project a little bit closer to you, although still in another country or region. 

It brings significant benefits compared to off-shoring: same time zone (which allows easier meeting schedules), fewer cultural differences (work and cultural difference are kept to a minimum), proximity (this allows for more frequent face-to-face meetings) and faster problem-solving (as proximity allows for urgent problems to be dealt with more quickly). These benefits come at a higher cost, but it is still significantly lower than on-shoring outsourcing. 

Although all these benefits represent a significant improvement of near-shoring vs off-shoring, it still brings some risks: some cultural barriers can still introduce misunderstandings and delays during  projects’ delivery and most of the meetings are still virtual, which doesn’t allow for the strongest bonds between supplier and client, which is key for excellence in the final results.

In order to overcome these risks and take them to a minimum, Drupalera (by Emergya) has taken near-shoring one  step further: locally managed near-shoring. This means that, while the Drupal development team remains in our headquarters in Sevilla, we serve clients in other countries in Europe such as Switzerland or the UK with local project managers based in the same countries than the clients we are serving. This way, we can guarantee that the potential risks linked to off-shoring are properly managed _internally_.

This strategy has been celebrated by many of our clients, who have benefited from our diverse range of services, including front-end development, agile QA, system integrations, etc. As one of them, O2, in the UK put it:

“Drupalera team were great to work with - even from the UK. They made sure that distance and the language wasn’t a problem. I would recommend working with Drupalera, as they listened to my needs and helped to come up with solutions that would help - and we now have a great website!”.

Locally managed near-shoring is proving to be the best outsourcing approach for many of our clients. 

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