What Is Onshore Outsourcing for Digital Innovation

The direct path to growing, scaling, and broadening the scope of your company is, more often than not, built on difficult terrain. Working on any ambitious venture involves more than a little bit of working outside of your comfort zone, tackling new, unfamiliar projects or untested initiatives for the sake of a brighter, more productive future for your organization.

It’s a concoction of factors that has no shortage of issues: short development periods, inexperienced team members, overstretched resources, so on and so forth. No business, small to large, is exempt from finding themselves in unfamiliar waters, working outside their areas of core competency.. As a result, these companies turn to outsourcing for help, enlisting the assistance of a third-party to connect the dots and deliver quality projects by the deadline.

Outsourcing as a practice is no stranger to even the largest conglomerates, considering how these models present substantial cost saving benefits universally. However, offshore outsourcing, the most commonly utilized outsourcing option, carries a fair share of baggage, and while it’s affordable it’s proven to be an imperfect solution. In its place, onshore outsourcing has been experiencing a surge of popularity, providing an alternative that helps reduce risks and overcomes many cons of offshoring, while simultaneously bringing jobs back home.

What Is Onshore Outsourcing

Onshore, as opposed to offshore that sources talent from overseas, specifically refers to outsourcing one or more services or processes to a provider based in the same country. Location-based benefits is the central virtue behind what makes onshore outsourcing work, as keeping your outsourcing partners within close geographic parameters enables your business to access talent, infrastructure, and technology your company would not otherwise be able to possess.

Projects and responsibilities falling outside the realm of your core responsibilities fit a convenient niche with these onshore outsourcing companies. Delegating those non-core responsibilities to a third party provider for whom such activities are its core business is a clean and easy solution that leaves you, as the primer organization, free to focus on your core competencies without compromising project integrity and delivery.

Benefits of Going Onshore

The critical points you’re interested in are how onshore outsourcing benefits your business. What may be more informative, as we are obliged to illustrate, is how onshore differentiates itself from offshore for the better.

Ease of Communication

As soon as you invest in an offshore company, you’re contending with time zone differentials. Working with a schedule division offset by anywhere between 8 to 12 hours has a noticeable impact on the consistently, quality, and deliverability of your assigned projects. Without an accessible point-of-contact, where both teams have overlapping work schedules, communication slows to a crawl.

Onshore outsourcing also appreciates the benefits of a shared language, considering the chances of working with a U.S. company that doesn’t have a native English speaker on staff are slim to none. Foreign companies don’t share the same luxury, lending to the increased risk of miscommunication and mistakes. Onshore outsourcing mitigates these potential fault factors, leaving no obstacles in effective communication and collaboration with the extended team throughout the project, offering some cost savings as well due to fewer associated risks.

Greater Level of Control

Longer distances abdicate your company’s authority over a given project by necessity. An onshore outsourcing company, by removing geographical and communication difficulties, provides your organization with the accessibility to oversee progress in real-time and, if required, schedule face-to-face meetings that would otherwise be prohibitively time-consuming and expensive with offshore companies. The ease and convenience afforded by onshore companies streamlines communication avenues, keeping everyone involved in the loop at any given moment.

IP Protection

As soon as you step outside of the western hemisphere, IP protection is no longer as watertight as it’d be at home. The Office of International Intellectual Property Enforcement takes care of the effective protection and enforcement of intellectual property rights (IPR) around the world, promoting IP protection and enforcement as vital for economic development.

The USA is also a member of international agreements for the protection of IP rights as administered through the World Intellectual Property Organization. As a result, any provider based in the US will abide by IP laws. When sourcing from foreign companies, you aren’t guaranteed the same level of protection you’d enjoy stateside.

Highly Skilled Talent Pool

The United States is one of the most technologically developed countries on the planet. By that same token, the American software developer talent pool is filled with skilled individuals with years of real-world working experience under their belts. Local companies guarantee teams staffed by these developers and professionals, all well versed in the latest technologies and practices.

Disadvantages of Going Onshore

No service is ever truly without its flaws. Onshore outsourcing has some definitive advantages over offshore options, but where it thrives in some areas, it has its own shortcomings in others. While your company may still decide that working with an onshore outsourcing company is the right choice for you, staying educated on its detractors helps inform your business strategy and selection.

Talent Shortage

The labor pool is highly talented, yes. However, despite there being a large offering of skilled developers, engineers, and technicians within the United States, the labor pool itself is small and shrinking. America hasn’t been producing the same quantity or quality of developers it used to, and due to recent crackdowns on H-1B1 visas for foreigners to work in the U.S., companies don’t have many options for onshore hiring.
High quality talent doesn’t mean easily accessible talent. The smaller the labor pool, the more difficult it will prove for your company to source dependable, affordable outsourcing teams to work as your extended workforce.

Higher Costs

America isn’t the cheapest country to make a living in. When you take into consideration high living and labor costs of the U.S., specifically the biggest tech hub cities, outsourcing onshore becomes the least cost-effective option. According to a Deloitte survey, 87% of IT companies use outsourcing for cost-cutting reasons. You may be able to source top-quality talent, but it comes at the price of an expensive partnership deal.

The U.S.’s talent shortage further contributes to this issue. With a small talent pool, the demand for the services of competent software developers leads to their prices skyrocketing in response. With less competition to vye for work, the labor pool is free to dictate substantially higher wages for services rendered, whether the quality of work is deserving of it or not.

Lack of Dynamic Resources

Many onshore companies can’t afford to maintain a large staff to meet new, agile needs. Leveraging an agile software development team is ideal for producing projects backed by consistent revisions, alterations, and quick turnaround, creating a fully realized final version. This type of agile response and skill filling can’t usually be done by onshore companies in a cost-effective way, leaving project delivery to be desired.

How to Counter Onshore Cons

As it stands, while onshore outsourcing has several distinct advantages over offshore options, it’s not a perfect option that’s better in every way. Offshore outsourcing is still much more cost-competitive, featuring lower prices at the expense of reliable results. There’s no definitive superior option, as each choice’s flaws tend to balance out their pro’s fairly equally.

However, it is possible to combine the best of both worlds - onshore and nearshore outsourcing. Nearshore outsourcing is similar to onshore outsourcing, as each option stays within similar time zones to your company. However, rather than partnering with a company from your own country, nearshore outsourcing is chosen from a location in a bordering country, like Mexico. Merging these two options promotes efficient results without compromising project integrity, even in times of crisis where budgets are tight.

Onshore + Nearshore = A Winning Mix

Nearshore is like the third bowl of porridge in Goldilocks, striking that ideal mixture combining the best of onshore and offshore worlds while mitigating their flaws. It offers cost competitive, highly skilled talent with real time collaboration, while also providing agile teaming able to scale projects and allocate resources quickly.
Both onshore and nearshore offer the potential for on-site visits, as well as easily schedules video calls when remote working is the norm. This is a bonus for companies who want a hands-on approach, with the possibility to create cost competitive schemes without compromised quality of delivery.

Mexico is also a part of USMCA, a digital trade agreement between Canada, the United States, and Mexico that provides high IP protection, simplified visa procedures, and no tariffs on digital products. Incentivizing digital trade between these three countries establishes a ground-floor expectation of quality, as both Canada and Mexico are required to match U.S. IP law caliber as the standard for protection.

Conclusion

Onshore and offshore may be the right business choice for your company. Every requirement is unique, and depending on your business goals either of those options may be the picture-perfect deal you’re looking for to grow your company. However, considering the rising popularity and objective approachability of nearshore outsourcing, it’s quickly becoming apparent that, while it isn’t the absolute cheapest option, it provides a cost-competitive alternative to traditional outsourcing options that capitalizes on their strengths while appropriately reducing their weaknesses. Your best option may just be the one you haven’t tried yet.

When you’re looking to supplement your company operations and leverage the power of outsourcing, Improving has the resources and experience to settle the score for you. Improving is a leading firm across the United States and Canada for digital services and outsourcing, now also including operations in Mexico with a Nearshore delivery model service offerings through iTexico. You’re looking at a great opportunity for projects that require both options of the outsourcing spectrum. Visit us at our contact page to learn more about how we can get your company started on the right outsourcing track.