Are you considering outsourcing all or part of your IT services to another European country for the first time? Here’s some guidance on how to go about it.
If you are reading this then you will probably already be familiar with the concept of Nearshoring as a strategic development option. However, if you are considering outsourcing all or part of your IT services to another European country for the first time, then regardless of whether you are a start-up or even as an established player in your market, you will need some advice/guidance on how to go about it.
Here are our top tips:
- COST
Cost is undoubtedly the number 1 reason companies look to outsource their IT development to another country. Quality IT development is highly skilled and normally involves high labour costs. Reducing the cost of IT development can be desirable and even crucial to any company. However, Nearshoring should not be looked upon merely as a cost reduction exercise but rather as a cost-efficiency strategy. Getting the same or better bang for your buck, as it were.
It is obvious that cheaper is not always synonymous with better and that lower cost may imply lower quality. However, when you look cross-border it is possible to find top-quality, highly-skilled teams at a lower cost than in your own country due to lower wage levels or tax advantages, or even currency fluctuations for countries outside of the Euro zone. - THE CULTURAL FIT
Finding the right IT partner is much more than finding a company that can technically develop or deliver the IT solution you are looking for. You have to look a bit further than a potential partner’s client list, their history of projects developed in your business sector or their glossy e-brochure or report and accounts.
Understanding that the company is financially stable and will not disappear mid-project is fundamental, but once again it is more than just looking at the numbers. Once more it is about quality and not just quantity. By this, we mean understanding the potential partner’s corporate culture. You should try to find out a bit about the company’s reputation in the market, if they have or nurture their own in-house developers or if they mainly outsource to freelancers who are here today but gone tomorrow.
Companies that adopt a more human-centred, people-first culture, focusing on team-building and development tend to be a much better bet than companies that focus primarily on cost reduction through hiring cheaper freelancers as this could have implications for your product’s integrity and consistency and also imply unforeseen cost and schedule overruns. - GEOGRAPHIC PROXIMITY
All good business is conducted face-to-face, even in an increasingly remote/virtual post-pandemic social and business environment. Virtual meetings are increasingly vital and most IT functions can be fulfilled entirely remotely, but there is no replacement for meeting your partners and getting to know them personally for building a more solid, smooth and reliable relationship, so proximity to your own country is important in terms of travel cost and time.
And this applies not only to the initial vetting and selection process as regular face-to-face meetings will be necessary to monitor progress and ensure the development plan is not only on schedule and on budget, but that the end-product itself will meet all your specifications. This is largely possible remotely but not so easy or efficient as being in the room with the project managers.
Besides the need for business trips, the smaller the time-zone difference the better. The greater the overlap of business hours the more efficient the working relationship will be. And the importance of smooth communication in any relationship cannot be overstated, especially in a distributed team.
In this fine balancing act between time and costs there is a sweet spot that ensures you are getting all the benefits of the business hours overlap, shorter trips to and from your nearshoring location all while keeping costs down.tip - AVAILABILITY AND COMMITMENT
If you are a smaller company, you need to make sure that you will still be important to your IT development partner and that they will be committed to you after your new IT solution/package is bought, installed and running. Besides normal maintenance and troubleshooting, you need to know that the potential partner will have the staffing capacity to cater to your future needs as they arise as well as the skill-sets required. This is important with any outsourcing, but when the developer is located in another country you need to ensure that you will not be easily forgotten. At BOLD part of Devoteam, we always adapt to our client’s processes and context, no matter the size. Our top priority is, and always has been, to help our clients grow, develop their business and adapt to the ever-changing needs of the market.
If you are looking for the ideal partner to start a Nearshore project, find out why Portugal may be a great option. Visit our Nearshore technology centre for more information.