Articles | April 2, 2020

Nearshore and offshore cooperation: management of distributed teams

It is predicted that by 2028, 73% of all departments will have remote workers. Working with distributed and dispersed teams seems to be inevitable, especially in the era of digital transformation which forces companies to collaborate with professionals located elsewhere in the world.

   

Also, the up-and-coming generation of younger managers place emphasis on flexibility and remote collaboration. This comes with challenges related to team management, especially in terms of the nearshoring and offshoring models. How to work efficiently with distributed teams? What are the best practices?

All shades of outsourcing: nearshore and offshore

In 2019 54% of companies declared that they were facing a talent shortage. This is one of the major reasons to delegate IT services to an external company. The main concept behind IT outsourcing is to maximize profits and minimize internal effort by entrusting work to an experienced provider. Companies are often aware of what they want to gain, but are not sure which outsourcing model to choose.  The following questions often arise:

  • “Should I choose a nearshoring or offshoring model?”
  • “How will outsourcing impact the organizational culture at my company?”
  • “How to manage distributed teams effectively?”
  • “How to supervise remote employees?”

To answer these questions, it is crucial to comprehend the nature of offshoring and nearshoring. By gaining a better understanding of the pros and cons of these models, it will be easier to implement good practices for better remote collaboration. 

Nearshoring vs. offshoring

Both models have pros and cons, and these should be the key to choosing a model that would fit a particular company’s needs. Offshoring means delegating processes to companies located in distant locations, whereas nearshoring means delegating services to locations nearby.

Examples of offshoring

There are several examples of companies that have moved production overseas to India or China, which are considered major offshoring destinations for both European and American businesses. For example, India holds 65% of the international BPO offshore market. Let’s have a look at the pros and cons of offshoring cooperation.

Offshoring: pros and cons

Pros:

  • Competitive prices,
  • Functioning in a favorable tax environment,
  • Different time zones – suitable for providing 24/7 support.

Cons

  • Different business hours,
  • Language and cultural barriers,
  • Complex logistics, costs related to business trips,
  • Different corporate culture and work standards.

Nearshoring

The nearshoring model has become increasingly popular as the number of companies in Eastern Europe continue to develop their IT services, allowing European clients to gain a competitive edge. Poland, the Czech Republic, and Ukraine are the top nearshoring destinations in Europe. Companies which decide on nearshoring should be aware of the following advantages and disadvantages of this model:

Read: Why to outsource IT services to Poland

Nearshoring pros and cons

Pros:

  • Good quality-price ratio
  • The same or similar business hours,
  • Comparable working culture,
  • Nearness resulting in better communication,
  • Lower prices when compared to in-house services.

Cons

  • Higher costs compared to offshoring,
  • Distance.

Dispersed and distributed teams

Whether you go for nearshoring or offshoring, in both cases you will most likely cooperate with distributed teams (entire project teams located elsewhere) or dispersed teams (remote team members). Sometimes you’ll cooperate with individual professionals. The abovementioned geographical distance, working culture, cultural barriers and different time zones are the main challenges in working with remote teams. Studies show that 57% of companies which cooperate with remote workers have no policies to support them. This is surprising, since nowadays we are in the privileged position of no longer needing to carry out experiments in this area, in either the nearshoring or offshoring model. The good news is that best practices have already been worked out by outsourcing pioneers decades ago. Furthermore, as of recently we are technologically prepared to manage teams located elsewhere in the world better than ever before.

New generation of managers

Also, it is worth remembering that the younger generation of managers on the market will place an increasingly high value on flexibility and promote remote work as the new standard. As research shows, 69% of younger managers have employees in their teams who are allowed to work from home. We all need to be aware of the challenges related to remote cooperation as it will become increasingly important with time. It is predicted that by 2028 the new generation of managers and employees (Millennials and Gen Z) will comprise the majority of the workforce, so changes to management style are inevitable. This is why companies cannot postpone preparation for the remote revolution. There are several aspects you need to pay attention to in order to succeed.

Inclusion

Researches show that diverse teams perform better than homogenous ones. Diversity and inclusion are a real challenge in cooperation with dispersed and distributed teams. Bearing in mind the cultural differences mentioned earlier on, the following steps will help you to cooperate better.

Manager’s to-do list:

  • Make sure there is a proper recruitment process in place to cope with possible language and procedural barriers.
  • Allocate time for a kick-off meeting during the project if possible, to get to know your IT partner better
  • Create a safe working environment for everyone
  • Be sure to react swiftly whenever you see acts of exclusion

Flawless communication

As a manager, you know the importance of communication in a workplace and its impact on effectiveness. It is even more important while cooperating with distributed or dispersed teams. Spatial distance affects the way we communicate as we exclude 93% of the context of communication (non-verbal and para-verbal). While cooperating with remote workers, we do not see gestures or mimics which play an important role in standard communication. Also, spatial distance may force people to hide their real emotions and avoid conflict. Here is how to approach this situation:

Manager’s to-do list:

  • Pay attention to soft skills: while interviewing team members, concentrate on the soft skills of individual employees. Do they communicate clearly? Do they ask questions? Are they responsive? How do they deal with anxiety and stress? This will play a key role during remote collaboration.
  • Set goals: every team member should know what they are expected to do. If responsibilities are defined in a clear manner, everyone can focus on their task.
  • Schedule daily / weekly meetings and stand-ups: this will help to overcome social and spatial distance and allow you to check on the progress of work at the same time.
  • Choose a proper medium of communication: think over which tools are better for scheduled meetings and which to use for ad hoc communication.   
  • Select a model of cooperation: consider adopting one of the Agile methodologies
  • Listen and be sympathetic: show empathy and ask questions to check on the needs of individual team members.

Useful tools:

  • Communicators: Skype for Business, Microsoft Teams, Slack, Zoom – these tools help dozens of companies to exchange ideals and keep track of workflow. I describe useful tools in detail below.

Team Spirit

Remote teams are often task-oriented and there is limited space for networking and socializing.  Research has shown that the most productive teams consist of people who socialize together, so it is important to allocate some time for team building. Here’s how:

Manager’s to-do list:

  • Allocate time for off-topic conversations.
  • Organize a videoconference, so that employees can see each other.
  • Get everybody involved: ensure that everyone has their say and try to engage all of the team members during meetings. Some people may need encouragement and time to get involved.
  • Use gamification to engage team members, e.g. organize online contests with rewards.

Useful tools:

  • Projectors for stand-ups simulating face-to-face meetings – for example, organizing weekly stand-ups is an important part of team building. Remote teams can get to know each other which results in improved communication.

Productivity

As a manager, you need to trust that dispersed teams will do their best to deliver products within the given timeframe. Not overdoing it in terms of control is recommended, however, you should keep track of the workflow to ensure that KPIs are met, and deadlines are not jeopardized. Use dedicated programs to supervise virtual teams.

Manager’s to-do list:

  • Define your reporting style and choose tools that will help you to track productivity

Useful tools:

There are hundreds of tools supporting project management in IT outsourcing on the market. Most of them are applicable to the outsourcing model and can be used with Agile methodologies. Regardless of design, the number of functions and price, all of the applications have one feature in common: they are simple. We do not need to undertake training to start using these programs basically immediately. Despite the simplicity, there are other relevant functions which address the needs of diverse users. These are examples of different platforms and the possibilities which they offer, depending on the basic function provided.

  • Asana – advanced task list

This is a simple tool for intuitive task management within project groups. The functionality of the application includes e.g. assigning tasks to a particular person, adding a deadline, attaching files and commenting. In addition, it allows you to create sub-tasks, which can be assigned to other people and dates. All tasks, updates and data related to the project are visible in task lists, current conversations, the calendar, the list of project realization progress and attachments.

https://asana.com/

  • Microsoft Project – organizing with the use of Gant diagrams

Complementary to the Office package which provides advanced functions used in planning and carrying out projects, i.e. Gant diagrams. A number of ready templates, visualizations and diagrams on the timeline allow you to save time on creation and facilitate the swift analysis of data. This is important from an IT outsourcing perspective, especially while creating dedicated solutions. The tool allows you to manage multiple projects at the same time and to monitor progress, manage resources and working time.

https://www.microsoft.com/pl-pl/

  • Trello – simple workflow with the use of Kanban tables

In simple IT projects which do not require the multidimensional realization of particular tasks, the application based on Kanban dashboards works superbly. Trello allows you to manage the dashboard of tasks and share them in different teams. To each of the tasks, we can add labels, date of completion, people responsible, attachments and discussions with all interested parties. The tool offers a number of add-ons extending its functionalities, such as synchronization with mail or the corporate calendar.

https://trello.com/home

  • Basecamp – effective communication

One of the main issues while developing software in the IT outsourcing model is dispersal communication. The Basecamp application serves complex management, knowledge exchange and communication within a project. All those taking part in the project use one platform to exchange emails, share files or chat. Thanks to connection to the module which allows you to create and manage tasks and deadlines as well as the monitoring and reporting function, it is a good solution for the majority of simple projects.

https://basecamp.com/

  • JIRA – all you need in Scrum

In Agile projects it is worth considering the use of the Jira application. This well-built platform has a number of functionalities, such as Scrum and Kanban dashboards, Roadmaps and agile reports. We can use predefined settings or define our own workflow, in which we will plan and monitor task progress, submit completed project elements for testing and evaluation, and generate quality and efficiency reports in the final phase.

The platform also enables direct integration with development tools, which increases the precision of the team’s efficiency estimation and defines the dates of realization of forthcoming Story Points. JIRA is one of the most commonly used tools in IT outsourcing.

https://pl.atlassian.com/software/jira

  • Redmine

Each IT project has different requirements and needs when it comes to management. This well-configured tool allows you to manage all essential data and minimizes the time required for inputting the data. Redmine is an open-source platform which allows you to create your own tools based on available functions, where we find: wiki, a bug monitor, role-based access control, simple time tracking or non-standard fields.

https://www.redmine.org/

  • Milanote

Milanote is a tool for organizing creative projects into visual boards. By design, it feels a lot like working on the wall in a creative studio – visual, tactile and sometimes a bit messy – Milanote is a great fit for designers who work in teams remotely.

https://milanote.com/

The best solution for project management in IT outsourcing

We will not find one single best platform for management. The choice of system depends on project requirements, our expectations and the time needed to get it configured. The key is to create a list of basic functions that the application should have in the context of the project. Based on the list, select the appropriate application, while also taking into consideration its evaluation depending on the number of users, whether it is available in a cloud model or on-premises, or if there is technical support available. Finally, ensure that all the required data is available and that the contact information of people taking part in the project is added to the chosen system.

Summary

When labor savings are your primary goal and you need around-the-clock support, choose offshoring. By contrast, if you expect high standards and a similar working culture, while saving money at the same time, nearshoring is the best choice. Both models come with challenges related to the management of dispersed and distributed teams. The good news is that technology facilitates remote cooperation more than ever before. Also, new management styles will gain popularity through the new generation of leaders. By using dedicated tools and Agile techniques you can significantly improve cooperation and thereby create a friendly virtual environment for your IT projects.

Paulina Materna
Business Development Manager

She has been working in IT industry for over 13 years. In JCommerce responsible for sale of ERP and BI solutions, thereby advising clients the best solutions. Professionally and in private life interested in new technologies. She spends her spare time actively with her family.