The nature of modern businesses is quite competitive and increasingly digital, which is why the need to scale skills and resources can be tricky to balance within budget constraints. Also, the availability of technologically-advanced solutions has made the world a small place as communications are faster than ever before. Unlike traditional hiring of resources to meet the growing demands, you can now benefit from flexible up-scaling while maintaining the core team in the business. This is where resource outsourcing comes into the picture.
When it comes to ensuring that you have the right resources working for you, outsourcing talent has been quite a hot trend over the years. It can be because:
- More than 70% of organizations believe that outsourcing is advantageous in terms of cost-cutting (Deloitte).
- 24% of small businesses outsource some of their operations for improved efficiency (Clutch).
To say the least, outsourcing resources has caught up on the winds, as a result of which companies with fluctuating demands for human resources move past their in-house resources to look at the external collaborative models.
Also, the trends have made many business owners confused about offshore and nearshore outsourcing. If you are looking at these hiring trends but are unsure about whether to go with offshore or nearshore outsourcing models, let’s clear your doubts.
What is Offshore Outsourcing?
Offshore outsourcing, as the name suggests, refers to the process of outsourcing resources located in a foreign land. It involves hiring a team in a different country that has a different language/cultural values to work remotely for your organization. It is generally done through an outsourcing company located in a foreign country.
The need for offshore resource outsourcing can be gauged from the fact that not every company can afford to keep a pool of professionals on standby when their expertise is not being fully utilized. Unlike onshore outsourcing, there is no bound on hiring resources from the same city or state where the company’s office exists.
Various companies in the U.S., Asia, and Europe are some of the most popular offshore outsourcing destinations.
Advantages of Offshore Outsourcing
- With offshore resource outsourcing, you get access to a global pool of talented individuals to fulfill your short-term or long-term human resource needs. This is particularly when your business is located in a region that is short of the best talent your business needs.
- Particularly in the software development field, it is one of the cost-effective ways to hire experts from across the globe to work for your organization.
- This resource outsourcing model can help you benefit from organizing a 24-hour work model. Since the in-house and outsourced resources operate in different time zones, you can achieve a continuous work model.
- If you are interested in investing in offshore resource outsourcing for IT management, a dedicated team of experts can undertake your IT requisites without causing the on-premise HR burden.
However, you should also know that:
- With offshore outsourcing, you might suffer from time-zone differences and the related impact on work productivity.
- You might face the impact of cultural differences.
What is Nearshore Outsourcing?
Nearshore outsourcing can be considered an intermediate process that is designed to fill the gaps between onshore and offshore outsourcing. When you choose to nearshore a part of their operations, you choose a partner residing in a neighboring country with a similar time zone.
The primary purpose of choosing a nearshore partner is to partner with resources having similar cultures and languages. This way, neither culture nor time becomes a barrier to maintaining work productivity. It is considered a better alternative to onshore resource outsourcing as it offers more flexibility in relation to site visits and meeting the team in person as part of work requirements.
Advantages of Nearshore Outsourcing
1. With nearshore resources, you get the benefit of a highly trained talent pool without facing significant time zone differences. If the selected outsourcing company resides and operates in a similar time zone, you do not need to worry about the delay in project completion.
2. You can also avail optimum cost to hire resources externally in comparison to onshore outsourcing.
3. The differences between work cultures in two nearby countries are easily manageable.
4. Whenever you need to plan a visit to the outsourcing partner or discuss project-specific requirements, you can easily do so to maintain work relations.
While looking at the benefits of nearshore outsourcing, you should also consider:
- The cost of nearshore outsourcing lies between the offshore and onshore hiring model
- Strict project deadlines that require you to keep up with the daily deliverables and manage the nearshore team efficiently
Nearshore Vs. Offshore Outsourcing: Brief Comparison Table
|Parameters||Nearshore Outsourcing||Offshore Outsourcing|
|Cost||Might be as expensive as onshore outsourcing||Can lead to cost savings depending on the country selected for resource outsourcing|
|Time savings||Offers more time value on the back of low barriers to proximity||Depending on the selected outsourcing company and their work hours preferences|
|Convenience||Enables clients and hired teams to come on common grounds for projects discussions or training||Requires technology to offer a convenient way to work together irrespective of the time differences|
|Collaboration||Easy to maintain in person||Maintained via online tools for project development|
|Communication||Unaffected with the help of conferencing apps though onshore outsourcing has an upper hand||Unaffected with the help of conferencing apps though onshore outsourcing has an upper hand|
|Effect of time zone differences||Medium||Depends on the operational hours of the hired company|
|Effect of cultural differences||Medium||Medium|
What Should You Consider While Selecting a Recruitment Model?
A majority of organizations across the globe are looking for ways to improve their usage of resource outsourcing to create a balance between cost and expertise. To select the right outsourcing model for your business, you must consider:
1. Your business-specific requirements
Unless you know what exactly you are looking for, you might find it difficult to select the right outsourcing model. So, analyze your business needs and compare every outsourcing model in terms of its benefits to zero in on the best one.
2. Experience level of the outsourcing company
Once you are clear about the business needs, look for companies that have the experience and expertise to work for clients like you. Also, look at the project completion rate, basic turnaround time, and operational hours to make an informed decision.
3. Cost of resource outsourcing
Other than comparing the pricing related to different outsourcing models, you should also look at your budget for the same. The right selection should lie at the convergence of the internal budget and business requirements.
How Connect Tech+Talent Can Help with Your Hiring Needs?
You know your business needs better than anyone else, which is why it is important to dig deeper into the differences between outsourcing models by yourself first. If you feel the need for external assistance in hiring the best talent pool, get in touch with Connect Tech+Talent – a trusted staffing agency based in Austin. For more information, Talk to a hiring expert today.
1. When should you go for nearshore resources?
Nearshore outsourcing can be preferred when you seek a balance between the quality of work and cost. You can also achieve smooth communication with this model of outsourcing.
2. What should you consider while comparing offshore and nearshore resources?
Keep a check on the execution speed, execution risk, work competence, and time zone differences before making the final decision.
3. Is offshore resource outsourcing more popular than the nearshore alternative?
Each of these outsourcing models has its own pros and cons. Hence, it would be inappropriate to claim any of them to be superior to the other. Consider various related factors mentioned to compare the differences between the two.