Nearshoring versus offshoring

Nearshore outsourcing versus offshore outsourcing, what is the best ? in which cases ?

When it’s time to choose an outsourcing destination many companies confront the following dilemma first, before choosing the country and the vendor : ” Do we have to choose an offshore or a nearshore vendor” ?

To the newbies to the outsourcing word an offshore outsourcing (offshoring) destination is when the operations are done from a long distance and “time zone difference” country let say the Philippines, Vietnam or India for an European client versus a nearshore outsourcing

(near-shoring) destination when the distance & time zone are quite similar (let say Eastern Europe countries and even Egypt for Europe).

Making this choice counts already for 40 % of the success of the operations to our opinion (and 10 % the country, 30 % the vendor, 20 % the client) . Some type of projects are suitable for offshore and some are not.

Below the synthesis.

We had been doing outsourcing operations since more than 10  years, We managed operations in offshore and nearshore destinations, so we can tell the difference easily.

Below we explain for European companies and some North American & Canadian companies (East coast) who want to do an outsourcing operation, the difference between nearshore Europe with country like Bulgaria and Egypt & offshore (South Asia/India vendors). Our BPO services company offer both. 

NEARSHORING VERSUS OFFSHORING TABLE COMPARISON

Criteria
Nearshoring Nearshore outsourcing
Offshoring Offshore outsourcing
Easy access to the center
Yes 2-3 hours flight
No 10-15 hours flight
Real time collaboration
Europe : YES All day long
North america & Canada (east cost) : YES
Half day Morning 8AM to 3 PM
Possible with “night shift” for the employees.
But In most cases :
– Experienced good talents don’t want to work at night cause they have full of choice to work day time
– Quality & assiduity are problematic.
Night operations “can be” ok for operations with VERY strict processes to follow, examples :
– Call operations – Data typing operations
Languages
Fluent English & Multi languages capabilities in Eastern Europe English, latin languages, eastern european languages..
– English based or One language based in most of the case.
– English level can be very awful (example Vietnam)
University level
Similar with Western word
Very Different
Cultural affinity
Very similar
Very different : In most cases customers have to adapt their processes to avoid cultural incompatibility.
Project security
Very high : brand protection, IP protection, data laws and EU regulation…
Very Low
Cost
Normally the “hourly rate » is more expensive (about 30 % to 50 % depending which country you compare) but you have to take in account :

– The price have to be aligned with :
– The speed
– The security
– The comprehension of the project (specifications + the big picture)
– The overall quality of the deliveries that are in most cases incomparable
Qualitative offshore vendors have rates very similar than the one in Eastern Europe (speaking about a 15 to 20% difference)

Very Cheap vendors in offshore location means :
– Poor quality processes to None processes.
– Very few customers
– No experienced project managers
– Poor infrastructure
– Poor connectivity
Best when
– You have to collaborate with your team in real time
– You need multilingual staff
– You need cultural affinity with your staff
– You don’t really need strong processes
– This is the first time your company want to outsource outside
– You don’t need to collaborate in real time
– You don’t need multilingual staff or even non really “fluent” english staff
– You can handle cultural incompatibility
– YOU HAVE VERY STRONG PROCESSES TO FOLLOW
– You have « already » experiences with outsourcing
TYPE OF OPERATIONS
– Multilingual & complex call or DATA processing operations
– Complex IT developments or real time collaboration needs
– Complex BPO and KPO operations
– 24*7 basic (receptionist) call operations in english
– Non complex english Data typing
– Coding without any collaboration (onshore specifications)
– English & basic content writing

Of course there is always exceptions, some offshore vendors have great capabilities but we are speaking here about the average situation which happens in most of the time. We are always open to comments and questions.

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