When to Choose Nearshore Staff Augmentation Over Offshore

Struggling to find IT staff? You’re not alone.

A recent study by IDC stated that nearly two thirds of IT leaders in North America had missed revenue objectives, and suffered various other problems due to skill shortages. This severe IT skills shortage has forced many companies to look for alternative sources of staffing. 

Both outsourcing and staff augmentation have proven popular. Used correctly, both can offer significant benefits. 

What’s the difference? Because both sources of staff involve hiring external skills, there is often confusion between outsourcing and staff augmentation. Such confusion is understandable.

In simple terms, the difference between outsourcing and staff augmentation is mainly about who controls the day-to-day activity of the third-party staff. Let’s dig deeper.

The two most common types of hiring external staff

Staff augmentation staff are hired to work alongside a company’s existing team and effectively become a part of that team, even if they work on separate tasks. The staff augmentation staff will work remotely, but the hiring company determines what they do and manages their activity.

Outsourcing is normally associated with larger projects. The complete project is managed by the outsourcing company. The outsourcing company will have agreed milestones and will report to the hiring company on the progress. But the control and management of the staff is entirely the responsibility of the outsourcing company.

Which style is best for your company depends on what you are trying to achieve. Each is ideal for the purposes for which it was designed. Once you have analyzed your needs, choosing the correct route is straightforward.

What are Offshoring and Nearshoring?

Staff augmentation and outsourcing can be further divided into two types: nearshoring and offshoring. Although both can offer benefits, these subdivisions are very different. When considering nearshoring vs. offshoring, you should be aware that choosing the wrong one can profoundly impact the success of your project.

 Offshore staff augmentation has long been a popular choice in Europe. India and Eastern Europe have been favorite offshoring locations due to historical ties and low costs. The time difference between the hirer and the offshore staff is typically between two and eight hours, with all the delays that can bring. Culturally, Europe, especially the UK, can rely on historical cultural affinities with India.

Nearshoring has emerged as a compelling alternative for US and Canadian companies for significant reasons. The time differences are significantly reduced. The nearshore team and the client are often in the same time zone. 

The quality of English is good to excellent, and it is usually American English rather than British English. For many reasons, nearshore staff share cultural ties and similarities with their North American cousins.

How do these differences affect working together and project success?

Here are six reasons why Nearshoring is the best option:

1.         Proximity and Time Zone Alignment

One key advantage of nearshore IT services is geographic proximity. Nearshore outsourcing for the US refers to partnering with companies located in Central or South America. These countries will be within the same or similar time zones as the hirer. This proximity allows for more effective communication, collaboration, and project management. 

Consider how your project would fare if you had to wait 12 hours for every reply to a question or every fix for a bug. How do you manage project meetings?

For a project to run smoothly, you require real-time interaction, quick response times, and seamless coordination. Nearshoring for staff augmentation is the ideal choice as it reduces the challenges and delays associated with significant time zone differences. 

There are situations when outsourcing a large project can be managed via offshoring, as the interaction between the client and the offshore team is minimal. However, later support can be challenging for the reasons mentioned above.

2.         Cultural Affinity and Communication

Effective communication and cultural affinity are crucial for successful IT outsourcing engagements. Nearshore IT services offer a closer cultural alignment with the client’s organization. For example, Mexico has close ties culturally with many parts of the US.

Shared language, similar work ethics, and cultural understanding contribute to improved communication and reduced potential for misunderstandings. 

Although they may initially seem insignificant, the differences between American and British English can create some interesting conversations!

Garry Lea, CEO of Global Triangles, emphasizes this: "In nearshore outsourcing, cultural affinity plays a significant role in promoting teamwork and ensuring clear communication channels, leading to more successful projects.” 

3.         Cost Efficiency and Value

While cost is a significant consideration in outsourcing decisions, evaluating the overall value provided by nearshore IT services is essential. 

While offshore outsourcing might appear more cost-effective due to lower hourly rates, it is crucial to consider hidden costs, such as the impact of time zone differences on project timelines and communication effectiveness. 

One client who switched from offshoring to nearshoring explained that if the job was completed successfully, 10 hours of offshoring at $20 would be the same cost as 5 hours of nearshoring at $40, but the value would be vastly different.

Nearshoring balances cost and value by offering competitive pricing, better communication, reduced project management complexities, and increased operational efficiency. 

4.         Time-to-Market and Agile Development

For businesses with time-critical projects or those embracing agile development methodologies, nearshore IT services can be a game-changer. The ability to collaborate in real-time, share feedback promptly, and iterate quickly becomes invaluable. 

Nearshore partners can work in sync with the client's development teams, allowing for seamless integration and faster time to market. Agile project management benefits significantly from the speed and flexibility of nearshore outsourcing. 

5.         Talent Availability and Skill Sets

When seeking specific skill sets or niche expertise, nearshore IT services can be a superior choice. Nearshore outsourcing hubs often boast a vibrant talent pool combining technical proficiency and cultural affinity. 

These countries invest in technology education, leading to a highly skilled workforce capable of meeting complex IT requirements. Skills such as software development, data analytics, cloud computing, or cybersecurity are widely available. 

Companies needing such specialized skills can easily find them and gain a competitive advantage. 

6.         Intellectual Property Protection and Legal Framework

A question that often arises when discussing outsourcing IT services is the protection of intellectual property rights. Nearshore outsourcing offers advantages in terms of intellectual property protection and legal frameworks. 

Using nearshore service providers in Mexico can be an excellent option for companies based in the United States and Canada. With the updated trade agreement, USMCA, replacing NAFTA in 2018, intellectual property protection has been strengthened further. 

Mexico has robust legal systems aligned with the USA and Canada, providing companies with greater confidence and legal recourse. This alignment mitigates risks associated with data breaches and unauthorized use of proprietary information, ensuring data security and safeguarding intellectual assets.

How to decide if Nearshoring is best you?

Nearshore IT services offer a compelling answer for businesses that want to optimize their software development processes but are constrained by a lack of the right staff or skills. 

By carefully evaluating the relevant factors, you can make informed decisions about when to choose nearshore outsourcing over offshore alternatives.

Nearshoring strikes the right balance between cost and value. While offshore outsourcing may appear cost-effective at first glance, hidden costs associated with time zone differences and communication challenges can lead to inefficiencies. 

Nearshoring also provides better communication, reduced project management complexities, and increased operational efficiency.

Ultimately, the decision between nearshore and offshore outsourcing should be based on a careful assessment of your company's unique needs, project requirements, and goals. 

Global Triangles, your Nearshoring partner

Operating since 2015, Global Triangles is a US-based company that offers IT nearshore staff augmentation and outsourcing to clients across North America. We offer solutions that enable our clients achieve their goals at affordable prices. We pride ourselves on generating agreements that work for our clients and teams. 

At Global Triangles, we utilize a strong team of English-speaking Mexican IT developers, each carefully chosen for their work ethic and professionalism. 

We have a portfolio of successful projects in various domains, such as e-commerce, realty, and healthcare. Our English-fluent engineers can work on multiple technologies and platforms, such as web, mobile, cloud, AI, and blockchain. 

Contact us today without obligation to learn how we can help you.