Nearshoring – the good and the bad15 July 2016
The development of information technology is one of the strongest drivers in the acceleration of the globalized world economy. For business, borders are disappearing; gaps in the local labor market can be made up by specialists available in other parts of the world. For professionals it’s much the same – huge demand for specialist knowledge and skills opens up broad possibilities for cooperation with employers from all over the world. Besides the obvious benefits and advantages resulting from this state of affairs, there are also areas of risk, and consequently, more or less justified fears. Does hiring specialists from outside the company, even working remotely from a completely different country, lead to a loss of control of the teams and processes within the company?
Nearshoring? Offshoring? Rightshoring
Certainly, the benefits of having a team of in-house IT specialists are that it is subject to internal control from beginning to end, it is possible to maintain direct contact with employees, and also to build and maintain the relationships necessary to ensure an appropriate level of quality and innovation. In other words – employees who know their business, their employers, as well as their vision and goals, are by definition more involved. Outsourcing IT services can mean breaking this bond. In addition, if it comes to transferring part or all of the IT processes to remote regions of the world, such as to powers of outsourcing like India and China, it may be that we lose the possibility of restoring links under the new terms and conditions – whether for reasons as mundane as the time difference, or more complicated ones – such as cultural differences.
There is another way. Nearshoring is the concept of outsourcing processes to less distant regions – both geographically and – and perhaps above all – culturally. This model allows you to maintain contact, to create an understanding and a connection, without having to adapt to a different mentality and organizational and legal culture (differences in the latter, especially, carry a big risk for the company).
‘Do you speak English?’
How does it work in practice? The British are probably the best people to ask about this, as they have been taking advantage of the benefits of nearshoring for years. For obvious reasons, they choose the regions where English is common among potential employees. Not surprisingly, Poland is often the chosen country, and indeed in this year’s EF English Proficiency Index 2015 report was in the Top 10 countries in terms of whose citizens are most proficient in English as a Second Language.
A very interesting example of nearshoring in practice is the cooperation between one of the British startup and JCommerce. Startup came up with the idea to create a portal on which available offers from bookies are gathered in one place, covering many different disciplines. The application enables the comparison of rates and special bookmaker offers as regards cashback, as well as estimating the expected winnings. A brilliant idea, but it required a team ready to take on the challenge of creating this innovative platform and putting the idea into practice. In the absence of specialists on the UK market and the high costs which resulted, they turned to Poland in the search for a partner. And they hit the bullseye!
So then why Poland?
According to startup decision maker, the selection of a Polish outsourcing company resulted mainly from his first impression. After sending the initial enquiry, the response from JCommerce came back quickly and was the most competent response. His initial doubts pertaining to the language barrier vanished very quickly. The ice was broken through openness, communication skills and highly proficient contact with the customer service personnel. It quickly became clear, too, that the company had experience in such projects, knew what was expected and how to fulfill the expectations of the client. They proposed a team of programmers who were not only able to perform their assigned tasks, but show initiative and thus propose the best solutions.
After signing the contract, which gave each party a sense of security from a business standpoint, and provided for a five-month trial period, the team got down to work. To cut a long story short, after that period of time, both sides were so pleased that they decided to continue working together.
Critical success factors
We asked both the client and developers which factors were decisive in ensuring the success of cooperation. Both sides mentioned, among other things:
- openness on both sides;
- the first face-to-face meeting, having started from a knowledge transfer workshop over several days;
- the use of scrum methodology in the project, with a high level of involvement on the customer side;
- the flexibility of two-week sprints in the project;
- daily stand-ups, meaning 15 minute on-line meetings, during which the most important issues for the upcoming days are covered;
- joint game planning – a game involving programmers in decision-making; the client, seeing the vast knowledge of team members, attaches great importance to their ideas and suggestions; decisions are taken jointly by the owners and JCommerce experts, which gives both parties a sense of unity, teamwork and contribution to the project.
- Both sides were able to get very involved due to the fact that a strong relationship between the team and the client was created. The client treats the team like an integral part of the company, while developers have the feeling of significant influence on the project, which increases their motivation.
So it turns out that remote cooperation can have significant advantages for both parties. On one hand, the customer gets true professionals at a reasonable price, while on the other hand, specialists are able to develop and work on interesting projects using the latest technology. The need to organize meetings online ensures regularity and consistency, which means – paradoxically – that such contact is often more regular and effective than if the IT department was “in the next room”.
Nearshoring cooperation can bring significantly more unexpected benefits. Opening up to other regions and new markets could lead to the emergence of entirely new business possibilities, opportunities and points of view.