Development Outsourcing:
Offshore Teams vs. Nearshore Teams

As the technology world has evolved, the IT community has seen an immense increase in working with offshore development teams. Companies have learned many things over the years about offshoring, and used that information to evolve the model to include nearshoring: outsourcing work to a close or neighboring country.

Throughout this piece, we’ll delve into some key areas that businesses should consider and keep top-of-mind to improve your work efficiencies no matter if you’re working with offshore or nearshore development teams.

Communication

Communication is, far and away, the most important aspect of working with offshore and nearshore teams. However, there are many different types of communication to consider. All are valuable, but some more so than others. 

Verbal communication is very important, but may have limitations  due to language, accent, and dialect differences. 

The amount of verbal communication is incredibly important. Too much verbal communication can cause confusion if teams can’t clearly understand each other; longer discussions contain more information that all team members must comprehend.

With verbal communication, remember to keep it concise, clear, and simple. When the scenario allows for it, an onshore point of contact that already has a great working relationship with the offshore team can help all team members work through verbal communication issues.

Meetings are an integral part of business, including those working with offshore and nearshore teams.

Making sure all members of the team are included in team meetings, no matter how far they are away from each other, is key to completing a successful project.

The availability of web cameras and products such as Skype, Microsoft Teams, Zoom or Google Hangouts have allowed web meetings to be very valuable in assisting with communication. 

Having a visual of all team members along with verbal communication in meetings can be very helpful in picking up forms of nonverbal communication, such as gestures, body language, posture, facial expressions and eye contact. This helps build stronger relationships, improves understanding, and leaves fewer items open to (perhaps incorrect) interpretation.

Written communication is probably the most important form of communication for working with offshore and nearshore teams. Whether it’s email, project documentation or instant messaging, written documentation provides the recipient with time to read, process and comprehend the content before responding, which could save everyone time.

No development team should ever assume that one method of communication is enough. Multiple communication channels can help clarify key points. It is also important to identify and resist assumptions, which are made in all forms of communication.

Assumptions are often based on previous experiences, but everyone’s experiences are very different. To help combat assumptions, remember that it’s okay to state what is obvious to you. It might not be obvious to everyone.

Business Hours

When working with offshore or nearshore development teams, time zones can be drastically different, and can positively or negatively affect your business depending on the type of work involved.  

For some types of business, it is beneficial to give development teams the option to be productive almost 24 hours per day by leveraging multiple shifts in different parts of the world.  

However, these business hours require rock solid communication and even better documentation of the work being produced. Too much ‘back and forth’ can extend the timeline of a team member’s day or extend the entire project. 

The most important aspect to remember for all teams is to respect the time of the other team. If one team is getting to work, the other team is getting ready to go home to their family and friends.  

When it makes more sense for the entire team to be in geographically similar time zones, nearshore teams are a better option than an offshore team. This, however, doesn’t mean that nearshore teams should view business hours exactly as the onshore team. 

Cultural customs can lead to different hours being “standard” for their business day. For instance, in the U.S., the “standard” workday is 8am-5pm. However, for a nearshore team in Mexico, the more “standard” day is 10am-2pm, and then from 4pm-7pm or 8pm. It is their custom to take a 2-hour lunch, early in the afternoon.

Adherence to the unique cultural needs of nearshore teams positively supports morale and productivity.

Turnover & Knowledge Retention

One of the most difficult and unfortunate aspects of working with offshore or nearshore development teams is that turnover rates normally fluctuate between 20% to 50%. If the loss of staff wasn’t enough of a hurdle, those high turnover rates normally lead to knowledge loss as well.

Keeping in close communication with your offshore or nearshore development teams and establishing a quality work life will help decrease those turnover rates. However, through established business processes and documented knowledge shares, your business can avoid those gaps and allow new team members to seamlessly step into place and produce quality work.

Cost Control

There’s no question, the entire model of working with offshore or nearshore development teams was invented to save cost.  

But does it? Absolutely, in certain scenarios. 

When looking at the cost of salary and benefits for the work that your business is acquiring, establishing offshore or nearshore development teams can be quite alluring.  

But there are additional costs that must be considered when using offshore or nearshore teams: 

• Managerial and coordination costs
• Communication costs
• Travel and setup costs
• Onshore resource allotment
• Software or hardware costs

Remember to keep all of these variables factored into the cost of adding an offshore or nearshore development team.

To Recap

Just like working with in-house, local teams, there are many positive and negative aspects to working with offshore or nearshore development teams.  

Understanding your business needs and your team needs should determine where your team will be located. Communication is the key to a successful offshore or nearshore team. There can be challenges with work schedules, cultural differences, higher turnover rates and making everyone feel like they’re part of the team.

Offshore and nearshore teams can deliver major cost savings, but you have to look at the total cost of delivery, not just the hourly bill rate.

There are many aspects to consider, but if you acknowledge them, plan for them, and manage them, an offshore or nearshore team can be very rewarding for your company.