What is Nearshore IT Outsourcing?

Wednesday, May 13th, 2015

Nearshore IT outsourcing,  or nearshoring  is a term used for transferring IT processes and business projects to companies, located  closer to home, so that both customer and nearshore IT provider may take advantage of geographic proximity, fewer time zone, cultural, linguistic differences, common economic, political, or historical linkages.

The work that is majorly outsourced nearshore is software development. We can say that nearshoring or nearshore IT outsourcing is still considered as a relatively new term in outsourcing field. Nearshoring was first mentioned in 2005 as a word that had an opposite meaning to offshoring or offshore IT outsourcing, then it was used in a few articles later on, in 2007.  There are no information on who introduced this term into IT outsourcing terminology, however the term in those articles the nearshoring is used in the context of bringing IT outsourcing back to Europe and increasing local  IT talent pool to regain its competitiveness.

Nearshoring as an outsourcing term took off in Germany and the United States, but we cannot say definitely where it originated in.

Benefits of  IT Nearshoring

The major reason that companies decide to nearshore their software development and the rest of their IT work is cost reduction. A company nearshores to another country, where developers have lower salaries, and that difference allows nearshoring to be quite cost-effective to complete your development projects.

Unlike offshoring that involves sending your IT work to an overseas company, for example the USA offshores to India, nearshore IT outsourcing (e.g., Germany outsources its software and web development projects to Poland) comes with a few additional benefits:

  • closer proximity
  • fewer time zone differences
  • more cultural and/or language similarities
  • better communication
  • cost reduction
  • greater efficiency

Some of these conditions like geographical proximity that allows better communication can play a critical role when a customer decides to outsource a long-term software development project that surely will require ongoing communication between the customer’s in-house development team and its dedicated developers nearshore, and making frequent business trips to manage the project and track its progress. If this is your case, contact A-Grade IT to set up a nearshore team of dedicated developers in Poland.