In today’s business world, it is very rare to find a company that “does it all”. Regardless of the size of the organization, outsourcing is a fact of life. This could be with its manufacturing services like Apple or even IT and development work like Google.
Outsourcing simply makes sound business sense and while cost savings can be a reason, it isn’t the only one. A 2020 study from Deloitte highlighted six key reasons companies choose to outsource:
- Reduce costs
- Solve capacity issues
- Improve quality
- Increase the pool of available talent
- Increase the focus on core business
- Other organizational needs
While cost is one of the factors in this decision, it isn’t the only one and often is not the primary reason companies choose to outsource.
The Different Types of Outsourcing
When thinking about outsourcing, it is important to understand the different types or flavours of outsourcing that are in the market.
Local Outsourcing
Local or domestic outsourcing involves a company outsourcing a portion of their requirements to another business in the same region or country. This has advantages from the point of view of language and culture and lets companies work in the same time zone, which can be useful from a management point of view.
Local outsourcing is often not as cost-effective as offshore outsourcing due to the cost of living in many western countries.
Offshore Outsourcing
Offshore outsourcing is often the most cost-effective outsourcing solution, as companies can pick and choose resources from anywhere in the world.
However, it is important to also consider some other factors aside from cost when thinking about using an offshore outsourcer. Some areas of concern with offshore outsourcing include:
- Language
- Time-zone
- Culture
- Knowledge & Skills
- Quality
While prices might be lower if a project is not completed on time or to the expected quality level, the cost savings might start to seem less important. In fact, those cost savings could completely disappear based on rework that might be needed.
Nearshore Outsourcing
Nearshore outsourcing looks to bridge the gap between offshore and onshore outsourcing. Nearshore outsourcing allows companies to take advantage of the cost benefits of outsourcing while still retaining more control by keeping the outsourcer in the same time zone and often speaking the same language.
Understanding the services that can be outsourced
The common understanding of outsourcing, especially offshore outsourcing, is when companies transition jobs that require limited skills to lower-cost countries to take advantage of the cost savings. It’s important to realize that outsourcing is not restricted to simple call center jobs. Some of the primary areas that businesses choose to outsource include:
- Business Services – these can include services like sales, accounting and marketing, in addition to customer service and administrative tasks.
- Manufacturing Services – many organizations use third parties to help handle manufacturing services, as setting up a dedicated facility can be extremely costly.
- IT & Technology Services – this area is perhaps the most popular for outsourcing and includes many different services that I’ll discuss in further detail below.
The top IT Services to Outsource to a Nearshore Partner
There are many popular IT services that companies use nearshore partners for within their business. Some of the most common tasks are as follows:
Software & Website Development
Software development is a key skill that is being outsourced today. Many companies understand the importance of software applications within the business and as a means of communicating with their clients through apps and portals. Despite this understanding, most companies lack the in-house resources to build a solution. By using an outsourcer, they can create and market a solution much quicker than would otherwise be possible.
In addition to the creation of new applications, outsourcing can also help with website development. These sites can be simple informational portals or more complex eCommerce sites with integrated shopping carts. Aside from the initial site design, outsourcers can also help provide ongoing maintenance services, which can include security updates as well as informational changes.
Infrastructure & Hosting
Companies that choose to outsource servers and networking equipment can often save quite a bit of money. By using an Infrastructure-as-a-Service (IaaS) partner, companies can shift the burden of IT purchases away from themselves, opting for a subscription or pay-per-use basis.
For companies that have previously had to maintain their own data center, this transition to an IaaS solution simplifies budgeting as well as helps to reduce IT resource costs that would otherwise have to be incurred. Besides, as the responsibility for maintenance falls on the partner, additional benefits accrue, helping save the company even more in terms of time.
Finally, cloud solutions help improve overall communication and access. Companies attempting to build their own private cloud solution can expect to incur heavy costs in bandwidth and resource utilization. Also, potential security risks are high if the technology in use is not regularly maintained. Outsourcing this service to a nearshore partner can help remove these risks and costs.
Conclusion
Outsourcing has been around for many years and is a common method of saving money. However, in recent years companies have come to realize that offshore outsourcing is often not as effective or efficient as initially envisioned. Client complaints about service and product quality and the damage to a company’s reputation, have forced businesses to consider other alternatives.
Nearshore outsourcing to countries like Mexico is a good alternative. By being in a similar time zone to most of the USA, Mexico provides organizations with nearshore outsourcers that are easy to manage and guide. Too, with a similar culture and language, companies can find skilled resources that can help them succeed and grow.
If you’re interested in finding out more about nearshore outsourcing and how it can help you and your business grow and succeed, contact us. Let our team help you get to the next level.
For more information on how Near Contact can help you access the pool of IT skills you need, email us at info@nearcontact.com
About Near Contact
Specializing in digital transformation, software development, and mobile apps, Near Contact attracts and retains the top talent from across Mexico to support US enterprises and service providers. With over 20 years’ experience matching the right talent for each client and project, Near Contact’s flexible, hybrid outsourcing model offers fast access to a highly-skilled, scalable resource pool—delivering your project, your way. www.nearcontact.com
