Last Updated on July 20, 2023 by asifa
Software development projects are complex and laborious, particularly if you do not have an in-house development team. Therefore, many businesses in the past few decades have chosen to outsource their software projects or functions offshore for its myriad benefits. However, the tech industry is changing at an alarming rate, and offshore outsourcing of software projects is no longer optimal. It does not offer the same magnitude of benefits it used to. Nearshoring, which is outsourcing software projects to nearby locations, is becoming preferable to software outsourcing offshore. Let’s discuss about nearshoring vs. offshore outsourcing software:
Table of Contents
It is risky to outsource software projects to distant lands because it compromises data security. Exchanging information across such vast distances puts it at a higher risk of interception and theft than transmitting it a few hundred miles to a nearshore facility. Moreover, you must store information in risky foreign areas when you outsource offshore, where you have little control over security operations. On the other hand, when you outsource software projects nearshore, you can choose safer data storage and transmission options, which enhance data security. You can never be too sure when you entrust data security to a third party, so firms increase data security by eliminating the third party.
Another issue with outsourcing software offshore is that companies have to cede project control to a third party. Therefore, they have little say in matters they will ultimately be responsible for, which is a substantial challenge. It is easier to take accountability if you have control of a project. You have more control over projects when you use nearshore outsourcing than when you outsource offshore. Company executives and in-house software professionals can easily communicate with the nearshore team and even physically visit their facilities to ensure the work is done correctly. The increased control makes it easier to get a predictable outcome from the project than offshore outsourcing.
Hidden costs are an often ignored and understated price of offshore outsourcing. Though most companies move software operations offshore to save money, they still pay more than they should because of the hidden costs. Because of less control, it is challenging to monitor operations continents away, making it easier to suffer the brunt of the hidden costs. Such hidden costs are not an issue with nearshoring. Firms can closely monitor the budgets and spending of nearshore companies and reduce costs wherever possible. The increased control makes financial management easier when nearshoring, making it easier to save money.
Thanks to technology, we can transmit messages at the speed of light, including to distant offshore locations on different continents. However, if there are changes to make to a software project, it will take time to implement them when you outsource software operations offshore. There is less flexibility to make changes because of the distance, which means firms spend more time than they would if they engaged in nearshore outsourcing. Because software development teams and facilities are close by in nearshore outsourcing, changes can happen promptly, leading to massive time savings. Considering the competitive nature of the software industry, the time saved by nearshoring could significantly affect the outcome of projects.
Higher Success Rate
When firms outsource software projects offshore, they increase the chances that the project will fail. The third-party handling the project may not be as proficient as the parent company, and many other factors can affect the project. Due to minimal control, it is hard to take action when something goes wrong. On the other hand, nearshore outsourcing allows firms to react swiftly and ensure a project is going according to plan. The company will have control of the project because they have a more considerable vested interest in its success.
Offshore outsourcing of software projects has been the preferred choice for decades, but it is no longer optimal; nearshore outsourcing is. The above reasons make any company consider nearshoring their software projects. Nearshore outsourcing offers incredible benefits that offshore outsourcing can no longer.