Cost-effectiveness and flexibility in nearshoring

date: 28 April 2020
reading time: 5 min

The current situation is forcing a lot of companies to restructure their workflows and find new ways to grow. IT departments have their hands full, since it is their responsibility to create an infrastructure that allows everyone to work from home.

Plus, they also have to run ongoing projects remotely – in totally different conditions – which is challenging enough on its own. Changes and adjustments like this tend to consume some very precious resources, like time and money.

So, parallel to transitioning a team from working on-site to working remotely, the need for nearshoring may arise, due to its cost-effectiveness and flexibility. Especially when an organisation finds out that they’re very far behind in their digital transformation process, but must still press ahead. Nearshoring allows companies to develop their businesses in a very efficient way (without making unnecessary investments) and can be flexibly tailored to their needs.

9 proven examples of cost-effectiveness and flexibility in nearshoring 

People

  • No recruitment costs
    There’s no need to initiate a number of recruitment processes in order to choose the right candidates, and then devote a few weeks or even months to onboarding. Instead, you go through a single process of selecting one company to work with. Then you can choose your team of specialists (or a few individual experts) that have already been recruited and tested by your IT partner. Plus, in case you need to scale up, your partner can easily expand the team with any required experts, so you don’t have to look for them on your own.

  • No employment contracts
    No employment contracts mean no individual negotiations. There’s just one agreement adapted precisely to your needs and requirements, with a clear pricing model and detailed scope of cooperation. If any changes should occur, and you need to reduce the size of your team, your IT partner can easily handle this for you, by moving some specialists to other projects that they’re running. With in-house specialists, you would be tied to notice periods, and have to bear employment costs for much longer than actually needed.

  • No additional benefits
    You can save money on additional benefits that are often included in employment agreements, like gym subscriptions, free lunches, or the reimbursement of commuting expenses. This is between your nearshoring company and the specialists they hire.  

  • No training sessions
    If you decide to hire a software development company, you need to narrow down your choices to only consider organisations that focus on consistently learning and improving their skills. Technology develops rapidly, so you have to be sure they are up to date so that they can discover new possibilities, and even predict new trends. It’s their job, not yours, to ensure that every specialist has access to specific internal and external training sessions, workshops and conferences so that you don’t have to include these costs in your budget.

Infrastructure

  • No need for additional office space
    No matter how much your project and team will grow, you don’t have to rent additional space or move to a bigger office. This is a big advantage of remote cooperation – a lot of fixed costs are reduced to an absolute minimum. And it goes both ways, as you also don’t have to continue to pay for any unused space if your team gets smaller or once the project has been completed – which means that you won’t have to worry about expensive rental contracts that still have months to go.

  • No hardware/software investments
    Computers, smartphones, hosting servers, software licences for developers, designers and managers – these are all included in the package, so you don’t have to provide your remote team with any expensive tools.

  • No additional office supplies
    This probably isn’t something you think about, but every new employee uses tons of office supplies. Even though some of them are tiny and cheap, like paper clips or sticky notes, when you multiply these costs by the number of people you hire in a certain amount of time, the final sum may painfully surprise you. In a nearshoring model – these costs drop out.

Processes

  • No need to increase the workflow capabilities of your HR department
    Imagine hiring only a few or a dozen new employees around the same time. This would involve increasing the workflow capabilities of your HR department as well, which would bring further costs related to reorganisation – costs that don’t exist when you bet on remote cooperation with an external partner.

  • No problems with scaling up or down
    Scaling up or down in organisations and institutions that operate in somewhat rigid frameworks takes a lot of time, and therefore also money. A company that specialises in nearshoring can offer you a much more agile approach. They have the necessary experience and processes that help them react quickly and flawlessly to your changing needs. It’s not as big of a cost for them as it would be for you, and this flexible attitude comes with the package.

Wrap up

There’s no doubt that nearshoring is a very effective and flexible cooperation model when it comes to costs. And if you have ever considered a partnership like this – now may be the best time for it, since a lot of work has to be done remotely these days anyway.

You have to focus on your business growth without getting tied down by fixed costs. Nearshoring may be a great solution in this situation since you can start small, see how it works in practice, and then gradually develop your project. This is also a happy medium between taking investment risk and feeling secure about it.

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