Expert knowledge | October 17, 2019
The real value of money spent on nearshoring
OK, I admit: I put ‘the real value of money’ in the title to grab your attention. First of all, it’s not about the money. Of course, it is one of the main points on almost every list of the advantages of IT nearshoring. Every article, like ‘the 10 advantages of nearshoring’, puts money at the top. Money comes first, because… it’s obvious. Let’s look at the other important factors and find out that their value is much greater than what can be measured in any currency, yet leads to greater financial profits.
Nearshoring – seemingly non-financial advantages
Let’s recall the main advantages of nearshoring, usually mentioned just after the financial ones directly related to the price of the project.
- Access to already verified and motivated candidates. You don’t have to spend time on a complex recruitment process, which consists of several stages and which very often engages highly qualified specialists on your site. You can get people who are not only skilled, but also motivated, because your project is in-line with their professional development plan or it’s simply challenging in terms of the topic or the technology used. Moreover, you can take advantage of the available resources repeatedly. You don’t need to maintain a test team. You can benefit from a Testing-as-a-Service model every time such a need arises.
- Access to knowledge. You can choose between recruiting in-house and outsourcing… if you’re lucky. Sometimes you need expertise that is simply limited or even unavailable on the market. The requirements related to the project may vary, it’s not necessarily a defined scope. When it comes to new technological requirements, the importance of access to suitable resources can’t be overstated.
- Labor flexibility. You may need a software development team for a 3-month project. Taking the current situation on the labor market into consideration, it seems to be unfeasible to tempt highly-skilled professionals to get involved for three months, unless you can offer participation in Elon Musk’s Neuralink project or similar. Otherwise, it may be a real challenge to find skilled professionals who are available and interested in a short-term project.
- Innovation & competitive edge. In the past, outsourced teams were involved to deliver a repetitive job, a simple part of software development. But things have changed. The inability of the education system to respond to the needs of the labor market is a game-changer. The common talent shortage means that the vast majority of customers expect a different type of support. There is strong demand for experts, people who are prepared to bring solutions to complex problems to the table, or even more: to give the hallmarks of creativity and innovation. This leads to the next factor.
- A fresh approach to the problem. You pay for the resources delivered, but you get something more. By paying the hourly rate of a senior developer, you get his 10+ years of experience in that field. You gain the willingness and ability to solve complex problems that are not necessarily possible to solve based on the experience of an in-house team.
Read also: Why is it worth outsourcing IT services?
How to determine the value of nearshoring?
All the benefits mentioned above may be converted into any given currency, yet their value goes beyond money at the same time. The off-balance-sheet valuation takes into account a lot more than what is possible to easily sum up. What is the real value of money spent on nearshoring? Seems like it’s a question that can only be answered by the client.
There are many conditions affecting the value of the service in the context of the benefits received. The most important are:
- Whether you need high-qualified people for a given technology.
- Whether your project requires an immediate team extension (every time the success of the project is at stake, the benefits may exceed financial matters).
- Whether you need support in one particular area, like testing or cloud transformation.
- Whether you need support within a particular period (e.g. 2-3 months).
It is natural that clients searching for a nearshoring partner ask for a project evaluation. In everyday life we all need to know what we are paying for. But in our private lives we don’t always put money first, and nor do we in IT nearshoring. Of course, choosing the appropriate pricing model in IT is a highly relevant and extensive topic, but the aim of this article was to show that the value of IT nearshoring depends on numerous factors. The real value of services provided by a nearshoring partner in terms of competences, fresh approach and time saved cannot be measured in an instance, but brings profit in the long-term.
Read also: The best practices in IT nearshoring