7 Offshoring Terms You Need To Be Familiar With

The concept of building distributed teams has become increasingly popular in recent times. With the world today embracing a global workforce, more and more businesses are taking off on an offshoring pilgrimage, maneuvering through the plethora of overseas offerings that are available.

Different models, geographical locations, and blurry track records all intersect in ways that are extremely difficult to untangle. This collection of offshoring terms provides the first tentative step towards defining vendors and making an informed decision for moving parts of your business elsewhere.

1. Outsourcing

Among the many different terms under the offshoring umbrella, outsourcing has perhaps been the most controversial of the bunch, often confused with offshoring itself. However, there is a fine line separating the two.

Simply put, outsourcing is the practice of engaging with an external third-party vendor on a contract basis to deliver products or services.

While outsourcing offers you access to freelancers or vendors who work with freelancers at lower prices, the result can be a hit-or-miss situation. On the plus side, outsourcing provides flexibility. Since you’re hiring people on a contract basis, you only pay them for the work they do — no resources are spent on idle workers.

However, the staggeringly low prices come with compromise. For starters, the people you hire aren’t your own employees, which means that they aren’t really invested in your business. In fact, often, they’re working on multiple concurrent projects for different clients across the globe, and your project is just one of the many they work on. And because they’re not permanent employees, if they disappear, you have nowhere else to turn.

But can outsourcing work for your business?

Probably. If you’re looking for a team that can help you out for a one-off project, then outsourcing is your best bet. But again, always choose quality over price. On the flip side, if you’re looking for a sustainable solution that involves you scaling your team, then outsourcing isn’t the right way to go about it.

Outsourcing has its place, but it’s no substitute for a full-time development team.

2. Offshore Development

Offshoring means moving a business process to overseas territories. Many companies, especially in the US and Western Europe, struggle to find the right talent. On the other hand, organisations are increasingly under pressure to optimise performance at minimal costs. The scarce talent pool and sky-high prices meant that businesses had to look elsewhere — offshore.

Offshore development means building a dedicated team of developers in emerging tech hubs such as India, China, and the Philippines, to name a few. The lower operational costs and the massive talent pools drive businesses in the West to build software teams in these destinations.

By choosing to offshore, you can build an independent, fully functioning development team, anywhere in the world. Though this may add a time difference, it eliminates the risks of engaging short-term contractors as in the case of outsourcing. Your offshore team will collaborate with your in-house team, work on projects, and build innovative software for your business.

3. Nearshoring

For Americans, it’s Mexico. For Western Europeans, it’s Ukraine. For Japan, it’s probably China.

As the name suggests, nearshoring means ‘near’ to home. So, in a nutshell, nearshoring is offshoring but with greater geographical proximity. For instance, hiring developers in London can be very expensive. Good Ukrainian developers, however, work in a similar time zone, and the operational costs would be somewhat lower.

That being said, the economic gains by nearshoring development processes, haven’t been as pronounced as those for offshoring. A more predictable supply chain and constant, real-time collaboration sits at the top of the reasons for picking a neighbour rather than the next country.

In fact, prices in places like Poland, Estonia, Ukraine, and Mexico are starting to lean up against those in France, Sweden, and the US. So nearshoring distinguishes itself through talent and geography rather than low costs.

Read more at https://thescalers.com/7-offshoring-terms-you-need-to-be-familiar-with/