5 Cons of Offshoring
Offshoring and outsourcing are two popular business models that have grown in recent times as businesses look to reduce costs, streamline processes, reach organizational goals and reap the benefits of specialization.While there are benefits to offshoring, many organizations have learned that there are several cons, as well. If you're considering offshoring for your business, read on for everything you need to know.What's the Difference between Offshoring and Outsourcing?Before diving into the disadvantages of offshoring, it's important to understand the differences between offshoring and outsourcing. In recent years, these two terms have been used interchangeably because some of the aspects of each of these processes are present in the other.Outsourcing is a practice used by companies to transfer portions of work to outside suppliers rather than completing it internally. Companies may be motivated to outsource work for a variety of reasons. The most significant factors usually relate to cutting costs and reducing internal infrastructure.Outsourcing is an "umbrella" term, and while the process has been used for years in functions like accounting and legal, it has become wildly popular in software development and support.What is Offshoring?Offshoring happens when you relocate the work to a different country and is a form of outsourcing.What is an Example of Offshoring?An example of offshoring would be when a company from within the United States works with a company located in India or China for a specific project. So, offshoring is always outsourcing – but not all outsourcing is offshore. Make sense?In many cases, these companies look to take advantage of a much cheaper labor market. However, there are several hurdles and risks involved with offshoring. Some of the offshoring issues can be seen listed below.SEE OUR VALUE COMPARED TO OFFSHOREDisadvantages of Offshoring JobsTime Zone DifferencesOne of the biggest disadvantages of offshoring is the time zone differences. Many offshoring companies operate within a 5-12 hour difference from their client. Work schedules may need to be adjusted to accommodate time zone differences when working with offshore companies.Furthermore, unless your offshore partner commits to staffing late night shifts that work with your company's time zone, you may have to wait for responses from the offshore staff. These time differences can also lead to lengthy delays in project deadlines as both companies struggle to accommodate one another. Misaligned work schedules cause internal friction as the staff must tolerate unnatural working hours that do not provide the responsiveness and speed required in the digital economy.Communication and Language IssuesWhen working with a company from a different country, it is usually safe to assume that most people on your team speak English as a second language. When working with someone who natively speaks another language, this can make communication and collaboration a unique challenge even if they speak English with relative proficiency. For example, some accents are difficult to understand when speaking another language. So, even though a team can speak English very well (which is impressive in and of itself), that does not mean that communication will be as smooth as it is when communicating with someone who is a native speaker, another factor in a list of offshoring issues.Cultural and Social DifferencesEven if the language barrier can be overcome or minimized, an overseas team can have cultural and social practices that you will have to accommodate.For example, if you contract an agency from India, they can have up to sixteen public holidays a year depending on their regional location. Couple that with the United States' ten public holidays, and that is twenty-six days a year that rarely coincide. While members of the team might tolerate Christmas Day conference calls, it's more "Bah, Humbug" than "Happy Holidays." So, you must consider the impact of the fragmented calendar during the project and how it will affect your deadline.Work styles will also exhibit social differences. For example, it is considered acceptable and expected for a North American worker to be assertive and straight-forward. However, this is not always the case in other cultures which view the employer-employee relationship very differently. These cultural variations dilute the valuable input and feedback loops expected in Western business, creating an increased potential for offshoring issues to arise.The discrepancies in cultural and social practices can also lead to a lack of understanding of complex business problems. This in turn leads to business and personal misunderstandings and challenges that would not be the case when everyone on a team has a similar overall business dynamic.Disadvantages of Offshoring to IndiaCritics of offshoring note that the level of unemployment of the local economies in America increase. For example, if you outsource jobs to India, one of the disadvantages of offshoring to India is there is less opportunity and open positions for qualified Americans, which can hurt the national economy and livelihood of cities and towns across the country.By choosing a provider in the US, that creates more open positions for qualified local individuals and keeps more money circulating here as opposed to sending it overseas.ProximityThinking about visiting your offshoring partner? This could be difficult considering the distance, costs, and time spent traveling to an overseas location. If meeting with your partner and having any face time is essential to your company, offshoring may not be the right fit for your business' needs.Geopolitical UnrestThe unstable political climate in prominent outsourcing countries can cause increasing geopolitical risks for businesses. The Philippines, one of the world's most popular outsourcing locations, is frequently a victim of political unrest which seems to flare up without warning. This is true of many developing countries that are generally go-tos when looking to outsource work.Whether the issue is a government shutdown, military coup, riots over an election, or pressure involving drug cartels – all of these "far away" issues could quickly become much more real when your project or business is directly impacted because of the fallout.An Offshoring Alternative: Onshoring within the United StatesFortunately, there's no need to look overseas for quality software services. A simpler and more effective outsourcing alternative is onshoring. Onshoring is a business practice where companies source services from within their own country.Onshoring offers improved communication and increased productivity between both parties, while still working to reduce costs. It also eliminates the risks of compromised IP and data, geopolitical uncertainty, and contextual misalignment.For example, a company located in Los Angeles or New York City can reduce costs by contracting services from a company located in smaller cities in Middle America, where living costs and prices are much lower.The blend of finding quality talent at an affordable price point is quite advantageous for companies located within the United States. By working with a company located in the same country, both parties will benefit from more convenient time zones, faster and cheaper business travel, and easier collaboration.Rural Sourcing: The Nation's Leading Onshoring PartnerIf you’re looking for an onshore alternative for your organization's IT solutions, Rural Sourcing can help. As the leader in domestic sourcing, Rural Sourcing's innovative domestic model eliminates the obstacles of data security, IP protection, political concern, time zones, distance, language barriers, and more. We help keep jobs in the United States, and provide high-quality work at a fraction of the price of providers in major metro areas.With development centers strategically located throughout the United States, Rural Sourcing provides world-class solutions for organizations across various industries including pharmaceutical, healthcare, high-tech, insurance, and consumer & retail goods. Get in touch with us today to learn more about our capabilities, and to see how we can help your business outsource responsibly and economically without compromising quality.NEED HELP? LET'S TALK.
Why Rural Sourcing is the Next Starbucks
Confession time: I’m a Starbucks fanatic. For me, the day hasn’t begun until I’ve had my triple grande nonfat cappuccino. In fact, the company's former CEO Howard Schultz is someone whose leadership and guidance I've always admired (I’m the proud owner of an autographed copy of his book: Onward.) It was Schultz’s idea to create a third place to have coffee: a place that wasn’t your home or office. This vision created a new alternative at a scale that didn’t previously exist. The Rural Sourcing business model follows the same concept. Up until recently, businesses had two options for their IT workforce strategy. Businesses could bring in the talent to their office in their city, often at expensive hourly rates, or they could offshore the work to an outsourcing firm for less expensive hourly rates and figure out how to manage the cultural, security, IP, and time zone challenges. At Rural Sourcing, we saw the need to create that third option at scale. Small cities, big opportunities Onshore domestic technology talent is abundant in smaller cities such as Albuquerque, NM; Oklahoma City, OK; or Mobile, AL. These cities, complete with large universities, low cost of living and high quality of life, represent millions of available technology talent waiting to be deployed to solve software problems for the world’s greatest companies located in much higher cost locations. Rural Sourcing selects cities like these based on our proprietary data analysis of the qualified talent pool, the quality of life and the affordability of living in these locations. We then establish software development centers complete with the look and feel of a “Google-esque” environment, where software developers and quality engineers can focus on creating applications to support our clients on their digital journeys. The beauty of this third option, unlike Starbucks, is that it actually costs less than the other available options. With a substantially reduced cost of living in these smaller cities, the dollar goes a lot further than in San Francisco, New York, or even Atlanta. Also, when measured against offshore, domestic sourcing is more cost-effective when evaluated by the total cost of ownership (TCO) of completing a successful project in today’s agile software development world. The right blend I’m not saying that businesses shouldn’t consume the available talent within their own cities or even offshore, as both have their respective roles to play in the sourcing strategy. What I am saying, however, is that there’s a new coffee shop available that serves a remarkable third alternative that may just taste better than your traditional sources. Find out more about our unique blend of services here.NEED HELP? LET'S TALK.
Onshoring Software Development – Good for Budgets, Good for the Economy
As the tech industry continues to boom, the demand for developers, IT staff and tech professionals isn't slowing down any time soon. For decades, businesses tried to lower costs by offshoring their technology needs to other countries, however, they soon learned the unique challenges of offshoring such as time zone difference, language barriers, and cultural misunderstandings. These seemingly minor annoyances can cause some major problems: project delays, quality issues, headaches, and higher costs. As businesses’ needs transitioned from lowest cost provider to a focus on quality, and the need to develop software fast and “right the first time” (and still within budget!) – more and more businesses chose not to offshore and instead look for a better alternative. Rural Sourcing understood these challenges and helped introduce a new way to outsource development that not only helped companies achieve their IT goals, but also helped local economies capitalize on and retain their best tech talent. Onshoring Software Development Work to Help Businesses & Local Economies Founded with the goal of connecting companies with talented, qualified IT professionals, Rural Sourcing has brought thousands of jobs back to the US in midsize cities across the country as part of its domestic sourcing model. Not only does Rural Sourcing’s model bring tech jobs back to the United States, but it also does so in a way that supports small to mid-size local economies and creates opportunities for the tech professionals who call these places home. Instead of building development centers in large metropolitan areas like Silicon Valley and Boston, Rural Sourcing establishes centers in smaller pockets across the country such as Alabama, Arkansas, and New Mexico, where the cost of living is less expensive and there's a wealth of tech talent from universities and other businesses in the area. The opportunity to work at a Google-esque development center and with Fortune 1000 companies is incredibly enticing for tech professionals who have the skills to work in Silicon Valley or NYC, but prefer to live in a smaller area for a variety of reasons, including economic, family, or even just personal preference. As a result, companies that work with Rural Sourcing benefit from high-quality services at affordable prices, and thousands of jobs are created that can have an enormously positive ripple effect on local economies. It's a win-win-win for tech professionals, companies, and the cities our development centers call home. Measuring the Economic Impact of Rural Sourcing on Communities To figure out Rural Sourcing's true economic impact, we reached out to the James M. Hull College of Business at Augusta University in Georgia. The team measured our economic impact by using an input-output model in IMPLAN software. This model allowed Augusta University to examine the economic linkages within the economy that exist between businesses and other businesses, and businesses and the final consumers. In short, we wanted to know how much our development centers helped boost the economies where they're located. As a result, the team was able to provide a comprehensive assessment of our local economic impact, which considers the number of jobs created and sustained, as well as the total output, in dollars, that is contributed to the local economy. The Results: Rural Sourcing's Positive Economic Impact The impact of Rural Sourcing on its communities is far more than just the number of jobs created. With more jobs in local communities, people have more disposable income to spend, which trickles into the economy and supports local businesses. When it comes to measuring Rural Sourcing's total economic impact in just one community, the results are astounding. The study found that Rural Sourcing had a total economic impact multiplier of 3:1. In other words, for every dollar put into the community in the form of payroll or capital expansion, that dollar gets multiplied by 3 times. If we expand this economic impact to reflect each of the six development centers across the U.S., Rural Sourcing is responsible for contributing $100 million-$150 million annually to the surrounding local communities. Typically, Rural Sourcing agrees to ten year commitments for job creation so extrapolating today’s level of investment in these communities across the ten year commitment means we have a $1 billion-$1.5 billion impact on our selected communities. Our Commitment to Creating High Quality Jobs in the United States Rural Sourcing is taking huge steps to support the American dream. While other conglomerates have favored larger metro areas, Rural Sourcing has fostered innovation and growth in small cities across the United States. And we’re incredibly proud of the impact we’ve made: by stimulating job growth in America, we've helped local economies grow by more than $100 million. NEED HELP? LET'S TALK.
What is Domestic Outsourcing?
[embed]https://www.youtube.com/watch?v=yjwJqEESbkQ[/embed] Many people have the question, What is Onshore Outsourcing? Onshore outsourcing, also known as domestic outsourcing, is an increasingly popular business model that uses US-based companies for internal business support as opposed to sending them overseas. Simply, that is the onshore outsourcing definition. IT offshore outsourcing to India, South America, Central America, and Eastern Europe used to be the first choice when businesses were looking to save money. However, many businesses are now choosing to bring their IT, software development, and business intelligence back to the United States to improve speed, quality and convenience while still saving money over in-house or local contractor teams using the domestic sourcing model. Rural Sourcing is a proud leader of domestic outsourcing within the United States and provides solutions for application development, business intelligence and analytics, cloud solutions, enterprise applications, QA and testing. As a cost-effective and convenient alternative to offshore outsourcing, your company will benefit from increased efficiency and productivity. Discover the onshore outsourcing definition, learn about domestic outsourcing benefits, and see why Rural Sourcing is the country’s leader in domestic outsourcing. What Are The Benefits Of Domestic Outsourcing? Eliminating Offshore Outsourcing Headaches Many businesses look to external companies for business support but find that offshore outsourcing has a number of unique challenges such as time zone differences, language barriers, context and cultural misunderstandings – all which can cause delays, quality issues, and headaches. Fortunately, domestic outsourcing erases these roadblocks. You’ll benefit from real-time collaboration (as time zones are much closer) and access to a network of US-based professionals available to help ensure your project runs smoothly and you receive the product that meets all of the specifications. NEED HELP? LET’S TALK.Increasing Affordability of IT Projects One of the biggest advantages of domestic outsourcing is that it is the perfect balance between affordability and quality. This is especially true for software development and IT projects as those industries tend to cluster around major US metropolitan areas where prices for services are generally higher due to higher living costs and stiff competition for resources in those areas. This high cost is then passed onto your business in the form of higher project charges that can be a burden and above your available budget. But, that does not mean that your only option is sending the project overseas – not anymore. Instead of outsourcing projects to another country, you can get higher quality and more affordable services within the United States using one of Rural Sourcing’s development centers located in mid-sized cities across the country. For example, if your company is located in a big city, like San Francisco or New York, and needs help with Java application development or DevOps project, it can be very costly to hire a new internal team or outside partner locally. However, if you could have access to a team of the same expertise and quality in a smaller city in New Mexico or Georgia where living costs are more reasonable, the cost of the project would be lower and more affordable for the exact same end result – a great delivered product that is on time and works as expected. Domestic outsourcing is a cost-effective and convenient solution for businesses in need of extra assistance in highly targeted areas such as application and web development, instead of attempting to manage a team thousands of miles and many time zones away. If you need IT support, and want to keep it close to home, domestic outsourcing may be the right solution for your needs. Rural Sourcing: What We Do As the leader in domestic outsourcing in the USA, Rural Sourcing is an expert in Agile Development, Cloud, DevOps, Digital Engagement, and Salesforce Integration to businesses large and small nationwide. When you work with Rural Sourcing for domestic outsourced IT solutions, you’ll support American jobs and accomplish your business goals with enhanced quality, speed and ease when compared to offshore outsourced projects. We have a network of scalable IT solutions across our US development centers, who are focused on your unique business objectives, so you can eliminate bottlenecks and headaches and accomplish your IT goals with confidence. Contact Rural Sourcing to Learn More About our Domestic Outsourcing Capabilities We’re passionate about connecting companies with talented, qualified IT professionals in the United States. With an average of 10 years of development experience, each team member brings something unique to the job. If you’re interested in learning more about our domestic outsourcing capabilities, get in touch with us and tell us more about your project needs.
Partnering Enables Flexibility for Web Application Development
This fourth post in the Partnering with Intent™ series explains why most web application development organizations will partner to access the digital skills they need. Partnering offers IT organization an opportunity to tap into needed digital talent in a fluid, non-restrictive way. This flexibility is extremely important in the digital age when business initiatives and project priorities can shift endlessly.Partnering with Intent (PWI), a new approach to digital workforce creation, follows a business model proven with leading companies in a variety of market segments. PWI answers companies’ needs for the digital talent they don’t have, allowing them to take established products into new market segments, appeal to new groups of customers in a proven market and introduce new products and services. Businesses competing in the digital age require nimble IT organizations that partner to offer the rich, deep proficiencies needed to tap new opportunities with confidence.At its core, PWI allows companies, through their robust digitally prepared IT organizations, to enable innovation unhampered by technical limits. Access to the right digital talent at the right time, bypasses the need to recruit, retrain and manage current staff, gives IT departments the flexibility they need to respond to the shifting needs of the business with precision and speed.For example, when General Electric and Intel partnered to aggregate more than 6.8 million patient data points, they were able to provide healthcare leaders with the insights required to improve care delivery, reduce costs and motivate changes in behavior.READ THE WHITE PAPERIn addition to supporting unbridled innovation, PWI delivers the digital talent needed to create human-centered experiences that solve user problems and push the business-user experience to a higher, more strategic relationship. When customers see a company as responsive to their needs, brand loyalty takes hold, making it difficult for competitors to lure satisfied customers away. A leading provider of streaming video devices and channels learned that lesson when it partnered with a consumer electronics manufacturer to build a simplified “smart TV” centered on the user device’s operating system. In this example, the device provider disrupted the “upstream” supply chain to simplify the user experience and create a partnered “win-win” for itself and the electronics manufacturer.Finally, IT leaders need to remember that concentrating on a select group of trusted partners is vitally important to nurturing high-value, high-reward relationships. To keep these business-critical relationships functioning at a high level, astute IT organizations regularly update their software development partners on corporate direction, short-term and long-range business initiatives, and pivoting priorities. Effectively applying PWI principles to these relationships dissolves boundaries and enables the two sides to operate as a blended composite team.IT organizations that use PWI’s operational transparency and open communication to unite previously siloed IT groups create the high-performance composite teams needed to pivot when the digital business environment demands it.NEED HELP? LET'S TALK.
Partnering with Intent – Flex culture powers collaboration
This third post in the Partnering with Intent™ (PWI) series explains how a new workforce model built on the idea of a flex (or flexible) culture, enables organizations to change course on the fly – as the hyper-digital environment demands.Flex culture, a new approach to workforce management specifically developed for IT organizations competing in the digital age, revolves around an all-encompassing transparency that pervades IT leadership. By communicating freely and openly, not only about the organization’s shared purpose and approach to intentional partnering, IT leaders can assuage the fears of internal staff who worry about job security, while motivating externally provided talent to function tightly within an integrated team environment. This tight alignment across all types of IT talent enables the organization to manage through an almost constant onslaught of change – efficiently and effectively.READ THE FULL WHITE PAPERPainfully aware that they cannot now nor will they ever be able to afford the breadth of talent they need, IT leaders who take five pivotal steps to manage their workforces in times of hyper-change can build the skilled teams they need without breaking the budget:Delineate technology skills sets as either “core” to the business or “non-core.” This distinction gives IT leaders a clear view of the digital talent they are seeking when they begin working with a trusted third party to augment internal staff. Communicate to staff the “big picture” of the technology landscape and how they fit into it, openly sharing, as soon as known, emerging new priorities. Keep remarks focused on how they can prepare for and support coming changes personally and professionally.Form mult-disciplinary teams of IT talent that pair historical knowledge with digital expertise, teaching technologists to understand the customer experience and how the solutions they build and rollout advance the customers’ business goals.Screen internal and external IT candidates for critically needed “soft skills” and “culture fit” needed to navigate the IT organization nimbly and efficiently.Remember to extend digital learning opportunities to internal staff in an effort to keep their skill sets relevant and marketable.At its heart, flex culture rewards full-on collaboration between and among multi-disciplinary teams. When multi-disciplinary teams with a diversity of talent operate in lockstep, creativity and innovation abound, fast-tracking engagement, performance and, ultimately, loyalty to the organization.In the next PWI blog post, we will explore why a flex culture matters so much – not just to employees but to the credibility of IT leadership as well. NEED HELP? LET'S TALK.
Partnering with Intent – The Importance of Cultural Alignment
To advance the latest thinking about workforce management in the digital age, Rural Sourcing authored a breakthrough white paper entitled “Partnering with Intent: A new approach to dealing with the shortage of tech talent.”READ THE FULL WHITE PAPERThis second post explains how cultural alignment serves as a foundational element of the Partnering with Intent™ (PWI) approach. While alignment of core values and purpose starts with employees, electing to partner with companies that share this vision sets the stage for success. This same approach can also be applied to customer relationships, which builds company’s revenues and reduce customer churn.As IT leaders acknowledge that a lack of digital talent is the number one obstacle to achieving their business objectives, the role of augmented talent takes on a new criticality. However, many IT executives find when they go to market looking for digital technology assistance that the needed talent is out of reach financially.Ideally, the companies that provide digital talent go beyond looking at current projects and priorities. Partners who stand out from the crowd go the extra mile to proactively learn their customers’ mission, values and cultures. The third part tech providers screen their talent for fit as well as function. This proactive approach can help assure that external talent not only performs as needed but fits into the organization seamlessly. For example, digital talent that “fits” not only understands the company’s mission, they are empowered to contribute to pivotal discussions and share their expertise freely with all levels of the client’s IT organization.However, cultural integration requires time and commitment on both sides of the partnership. One of the first steps to building this partnership-based culture is to recognize that whether the culture has been built intentionally or not, it already exists. Sometimes, it’s an LCD culture (Least Common Denominator), which forms based on the two partners’ attitude, actions and language. These haphazard relationships break easily because they are fragile and, at times, accidental. In most cases, LCD cultures leverage the interests of the dominant partner, often at the expense of the second partner resulting in suboptimal outcomes.Intentional Partnerships, such as those advocated in the PWI model, require that both partners make a daily commitment to ensuring that everyone at the table shares the organization’s values and mission – even as these essential elements change and evolve. In this environment, true partnership becomes part of each IT team’s DNA.Remember that PWI can be applied to more than your relationship with your external digital talent resources. Extend that approach to your customers and you’ll likely see more long-term relationships with them as well as a healthier contract renewal rate. One company that continually focuses on cultural alignment with its customers boasts of an average customer relationship of 17 years and a 100% renewal rate at the end of the first contractual period. If you had those kinds of intentionally built and maintained customer relationships, what would that do to your ability to deliver technology to the business and ultimately your bottom line?In our next post in the Partnering with Intent series, we will explore how a flex culture, the next step of cultural alignment, unifies a workforce made up of in-house and contingent resources.NEED HELP? LET'S TALK.
An Introduction to Partnering with Intent
To advance the latest thinking about workforce management in the digital age, Rural Sourcing authored a breakthrough white paper entitled “Partnering with Intent: An innovation workforce model for the digital age.” A series of blog posts will highlight key takeaways from that white paper, as well as workforce management commentary from leading IT luminaries.This first post introduces the Partnering with Intent™ approach as a springboard to offering solutions to managing through today’s business transformations and the shortage of digitally prepared IT talent. Additional posts will explain how Partnering with Intent explores the importance of culture, encourages cultural alignment, and describes how transparency can help rebuild the trust lost during offshoring and why being a destination employer can offer a sustainable competitive advantage.READ THE FULL WHITE PAPERAs changing customer demands hurtle toward businesses at warp speed, companies are counting on new ways of combining people, processes and technology to enable digital adaptation. In the quest to succeed, IT leaders see a lack of digital talent at the number one obstacle to achieving their business objectives. As a result, CIOs are exploring new partnership and workforce models to meet this talent shortage head on. No company can afford to keep on staff all the digitally prepared talent needed to maintain and expand its market position. For that reason, enhancing staff capabilities with contingency labor has become a way of life for IT organizations at companies of all sizes. However, the unintended consequences of offshoring, such as the degradation of trust between IT leaders and those in their employ have soured the relationship between those in staff positions and externally sourced talent. Yet, the heightened demands of customers and the speed at which change occurs in the digitally adapted workplace demand more collaboration – not less. That’s why the three key components digital workforce management are so important:Partnering with Intent A “flex” culture TransparencyPartnering with Intent (PWI), a highly selective approach to sourcing specialized digital talent to enhance the IT staff, uses two radically different criteria to evaluate potential labor resources. Those two qualifiers – the presence of “soft skills” along with digital technology specialization and the ability of talent from partnered resources to support the company’s culture and values – have the power to redefine how IT companies choose their labor partners. “Soft skills” are defined as the ability to collaborate and communicate willingly and effectively, two capabilities that IT organizations competing in the digital age prize as much as technology prowess. Under the PWI model, labor partners earn value by being able to provide digital specialists that share their client’s mission and support the client’s culture. When these specialists from the outside blend seamlessly into the client’s organization and culture, everyone wins. In addition to PWI, today’s IT organizations need to build a “flex” culture to efficiently tackle the rapid rate of change that comes from digital. The “flex” framework enables IT organizations to source technologist specialists armed with the latest digital talents and the necessary soft skills as well. This holistic approach gives IT leaders a degree of workforce management latitude that was previously unattainable in the previous “hard-wired,” project-only orientation. With a flex approach, digital specialists can be combined with staff resources in a free-flowing, initiative-based agile team designed to accommodate shifting priorities and stimulate, not stifle, creativity. At its heart, the digitally optimized IT organization leverages teams’ cultural integration to respond to business-driven change. Transparency, the clear delineation of roles and responsibilities communicated openly, enables IT leaders to begin rebuilding the trust staff lost during offshoring. Composite teams depend on cultural integration and transparent leadership to feel more comfortable with their respective places in the IT organization and clearly understand how third-party labor resources contribute to organizational success. For IT leaders, trust and transparency have become a baseline requirement of the hyper-competitive digital age. In our next post, we will explain how to blur the delineation between internal talent and externally provided digital specialists, build high-functioning composite teams, and achieve the cultural integration necessary to digital adaptation success.NEED HELP? LET'S TALK.
The Hidden Risks of Nearshoring
While many companies usually have an understanding of some of the more common challenges of offshoring work such as potential language barriers and time differences, there are some hidden risks of nearshoring that may not be so obvious – but can have a detrimental effect on your bottom line. Things like political instability, economic uncertainty, and crime can have serious consequences and these geopolitical issues can have much larger ramifications on your business.There are many unknowns nearshoring to a foreign country that are not minor annoyances but can completely derail a project or partnership, which is usually not considered when working with a company in the United States. When you outsource your work to developing countries, these things that are seen on the news can have a direct effect on your life and business.If you are considering offshoring some of your business to Central or South America, it’s important to be aware of the political and economic landscape and how it may affect your business. Discover some of the risks of outsourcing to Latin America and how Rural Sourcing can help eliminate these risks.The Effect of Political Unrest on NearshoringIf you're considering outsourcing to Latin America, it’s important to understand the potential negative impact political instability can have on productivity, quality, and relationships.Countries in Central and South America are no strangers to governmental instability, and a military coup can have serious ramifications on the people and businesses there, potentially affecting your business if you offshore work there.Political instability can hurt everything from profits & operations to the working conditions of the employees. Political riots around elections can shut down cities and newly elected officials can dramatically change the political landscape overnight.While it may seem like politics are detached from other economic considerations, the reality is that no business can afford to ignore political factors that often shape the external environment of the business.SEE HOW WE CAN HELPHow Can Economic Uncertainty Affect Outsourcing?While the economy in some Latin American countries is developing, growing pains can quickly become more serious and put entire industries and businesses in jeopardy. A country can swing drastically in just a matter of years from a developing region, to one where people are seeking asylum and refugee status in neighboring countries. As a result, your business could be wiped out of employees.For example, the Argentinian peso (the world's weakest currency for the past two years) continues to fall, and businesses and household finances in Argentina are feeling the strain. Right now, businesses are having a hard time giving quotes or financing amid the currency disorder. Inflation was above 30 percent in 2018, and thanks to an especially weakened peso, spiked above 50 percent in 2019.In Venezuela, inflation is out of control and the currency has become practically worthless. Locals – aka the people who would comprise your workforce - struggle to buy essentials, as a month’s wages will buy a loaf of bread, two liters of milk, and four cans of tuna fish.The United States, on the other hand, is not accustomed to economic swings this drastic in the modern era.There are many things to consider when working with countries whose future is unclear. For example, do you pay in local currency or USD? How will a sudden change in exchange rate affect your contract and your partnership?These types of situations prove to be a challenge when offshoring business efforts to regions with volatile economic climates.Crime and Danger ConsiderationsLatin America has been dubbed the murder capital of the world. With just 8% of the world’s population, Latin America accounts for roughly a third of global murders, where lethal violence has grown steadily since 2000. To put that in perspective, nearly one in every four murders around the world takes place in just four countries: Brazil, Venezuela, Mexico, and Columbia.This has led Latin America to a crisis, costing the countries 3% of annual economic output. This is, on average, three times the level of developed countries.While many of the murders are gang/cartel related and less likely – but not impossible – to affect traveling business people, kidnapping is not uncommon for tourists perceived as “wealthy” to be held for ransom. Will it definitely happen? Of course not – but it's more likely in Rio than in Oklahoma City.Ongoing violence and petty crime in many countries can have near and long-term impact on your business, even if it's not politically motivated. Your business may be less inclined to send employees to these areas, reducing important local training and vendor management time. This adds risk to service delivery and long-term success that can otherwise be fostered by the cross-pollination of US clients and offshore providers.Petty crime, such as having a laptop or smartphone stolen, or being mugged, is a much more common threat for traveling business people. While not life-threatening, the technological security and general safety of employees is a definite concern.A Safe and Steady Alternative to NearshoringWhile outsourcing to Latin American countries can seem cost-effective, there are many unique challenges. When looking to outsource your efforts, it’s important to consider these risks and how they'll affect your business. The liability and uncertainty of these countries can prove to be a crippling challenge for businesses who may not have ever considered these issues.Onshoring with Rural SourcingFortunately, there is another alternative to offshoring that provides a more stable partnership for everyone involved. Rural Sourcing has brought jobs back to the United States by offering a wide range of software services from our strategically located development centers. From agile software development, supporting enterprise applications, the provision of cloud solutions to business intelligence, and more - Rural Sourcing conquers the unique challenges associated with offshoring, while still being an affordable option for US companies. Our development centers are in smaller regions across the United States, where the cost of living is less expensive. Not only will you receive high-quality services, but you'll enjoy cost savings in comparison to larger metropolitan areas.NEED HELP? LEARN MORE.
Amazon HQ2 is Coming – How Will You Compete for Tech Talent?
Amazon’s plans for a second headquarters will create thousands of high paying jobs at a time when unemployment is low and finding tech talent is becoming increasingly difficult. While the cities are gearing up for the economic boom, businesses are left wondering how they will compete for tech talent in this hot and competitive industry. The Amazon HQ2 Effect on Tech Hiring & Retention At first glance, the Amazon expansion is an exciting new opportunity. The competition for the new Amazon HQ2 was incredibly fierce as cities competed in hopes of growing their local economy. In fact, over 238 cities threw their hats into the ring, while that list was narrowed to 20 potential cities earlier this year. The $5 billion project will be approximately the same size as the company’s Seattle headquarters and occupy over 8.1 million square feet of space, now across these markets. With the volume of employment, Amazon adds to the community comes an influx of demand for housing, schools, hospitals, infrastructure and more. And with that, comes a demand for more workers. However, as you dive deeper below the surface, you’ll see how it affects local businesses who are competing with Amazon for talent. Initially, Amazon will be seeking to hire skilled IT and developer staff with a wide range of backgrounds from the area near its new locations. This means if your business has staff with these skill sets or you are looking to hire new talent, the competition is going to be fierce not only for new hires but you will also be competing to retain your current workforce. So, the big question is: How can businesses be expected to recruit new hires and retain tech employees when the prospect of working for Amazon is so enticing? When Amazon announced its plans to open a new headquarters, it was said that the 50,000 new hires will make an average salary of $100,000. If you plan to retain or expand your local workforce, you’re going to have to keep up with not only increasing salaries and benefits requirements – but also compete with huge name recognition and prestige. However, there is another way to staff your tech team without having to participate in this escalating war for top tech talent and it is much better for your bottom line and budgets: domestic sourcing. Winning the Competitive Race for Tech Talent Creating a strategy for recruiting and retaining talent when a mega-corporation comes to town can seem downright daunting. Instead of competing with conglomerates who can offer high salaries with attractive benefit packages, why not assess your organizational needs to see if there are skills you can distribute? Domestic sourcing is a unique business model that is ideal for companies looking for outside resources but still want to keep work close to home. Onshoring your business efforts can give you a competitive advantage, especially for small to mid-size businesses located in a super competitive local market vying for top talent. Having a strategic partner on your side, like Rural Sourcing, means that you can tap into tech talent that may not be in your immediate vicinity while accomplishing your business goals and eliminating bottlenecks and headaches. Onshoring offers businesses a variety of advantages, providing firms with a way to focus on core competencies and build those skills while relying on partners to focus on their areas of expertise. It’s also a perfect way for businesses to save money, as companies do not have to compete with increasing salaries, and still get high-quality products. Along with benefitting from real-time collaboration, another great advantage of offshoring is that your partner can adapt to your needs, working with you when you have a big project and scaling back during slower periods. How Rural Sourcing Can Help Your Business Succeed Rural Sourcing’s development centers are located strategically in mid-size cities across the United States. Instead of trying to keep up with Amazon’s increasing salaries, you can get higher quality and more affordable services outside of this market while staying within the United States. Smaller areas like New Mexico and Georgia have a lower cost of living, so you can tap into established talent while getting a great delivered product at an affordable price. Not only is this a cost-effective solution for businesses located near Amazon, but it’s also a perfect way to eliminate the headaches of recruiting and retention.NEED HELP? LET'S TALK.
What Exactly is Nearshoring?
As organizations seek out solutions to save on overhead and labor costs while continuing to scale, outsourcing has grown in popularity. Outsourcing has been an effective model that allows companies the option to adjust their resources to improve productivity and efficiency while giving them the opportunity to focus on their core competencies. It allows businesses to save on direct and indirect recruiting and labor costs.While overseas companies used to be the preferred choice for outsourcing as it offered the lowest cost alternative, many organizations have started to realize the unique challenges associated with offshoring and have started looking for an option that saves money and cuts down on the headaches involved.One of the options many companies consider is nearshoring. Nearshoring is a type of offshoring that occurs when an organization decides to outsource work to companies that are geographically nearer (hence the word "near") to them than some of the previously popular countries in Asia and Eastern Europe. For example, instead of offshoring development work to India which is between 9-12 hours ahead of the US, a company might choose a company in Central America, thus cutting the time difference down so work can take place in relatively real time.However, although nearshoring allows two companies to be in more similar time zones, this doesn't solve all problems with overseas outsourcing – just one of them. Nearshoring still presents contextual, cultural, and language challenges as well as those of cybersecurity, IP protection, and political uncertainty. Companies need to be aware of these dangers before considering this option for outsourcing any projects.In this blog, we explore nearshoring in depth, including its benefits and drawbacks, and how it differs from other outsourcing models.Nearshoring vs. OffshoringAs companies sought out solutions for reducing operating costs and gaining greater operational scalability, many organizations looked to other countries overseas such as India, China, and Russia to outsource their activities, otherwise known as offshoring.Offshoring takes place across national borders and can be a cost-effective solution as offshore companies are willing to set lower hourly rates that are more in line with their cost living. For example, India became popular for knowledge-based offshoring (the best example being technology related) as India combines a relatively educated workforce with low wages. China became popular for manufacturing types of offshoring, with a lower skilled workforce and an even lower incomes.However, although offshoring is a cheaper option, there are many drawbacks. Offshoring can present many communication issues, as language and cultural barriers can get in the way of effective communication and put a strain on the workforce. Plus, deadlines are often extended due to the large gap in time zones, making it difficult to collaborate, stay on schedule, and communicate in real time. Tomorrow can mean different things in different parts of the world. Combine these significant intangible hazards with the material presence of risks around cyber-security, IP protection and economic and political stability, and risk soon outweighs a perceived lower price with uncertain delivery.Many United States-based companies wanted quicker turnaround times, which is why they started looking for partners that were located a bit closer to home.The Nearshoring AdvantageThe biggest benefit of nearshoring is that the organizations are physically closer, reducing time zone discrepancies. Fewer time zones differences allow teams to make faster decisions to stay on schedule and reduce delays. Closer time-zone alignment greatly enables operational cohesion, effectiveness, and team camaraderie. The geographic proximity improves productivity in both teams as they will no longer have to shift their hours to accommodate the outsourced employee group. Finally, travel between locations is made much easier under the nearshore model, making team interaction and regular inspection much easier.READY TO TALK? WE CAN HELP.What are the Disadvantages of Nearshoring?As with any business model, it's important to be aware of the challenges associated with nearshoring.While nearshoring solves most time zone barriers, it doesn't quite answer all of the challenges that operating in an international context – usually with developing countries - presents. Different countries will have varying national holidays, languages, and cultural differences that can prove a challenge to efficient working and communications.For example, a US-based company that works with a Mexican or Central American company may run into some language barriers, which can make communication a challenge. National holidays can be different between US and Mexico-based companies, which can lengthen deadlines and delay turnaround time. Differences in work schedules can also prove to be a challenge, as typical work days may vary between countries.Furthermore, it's also important to consider any new laws and regulations you'll need to adhere to when working with a company in another country, which can prove to be a challenge. Finally, nearshoring does not inspire much more confidence around geopolitical balance, the threat of compromised IP, or the management of sensitive data. Frankly, nearshoring is illusory in its ability to solve the problems of delivering high-quality software, cost effectively, at the required speed with an acceptable amount of risk.Onshoring: An Alternative to NearshoringWhile nearshoring brings two companies closer in proximity, this business model certainly isn't fool-proof. There are many language and cultural considerations that can lead to delays and problematic communication and navigating a nearshoring partnership - and the regulations associated with it - can be tricky. The real reason people opt for nearshore is nothing to do with the business conditions. It's just more fun, or at least less onerous, to travel "nearshore" to inspect their teams on a regular basis. Let's face it; most people would prefer a few days in Central, South America or The Caribbean than a quarterly 24-hour trek (maybe in coach) halfway around the world for a ten-day tour of duty inspecting your offshore resources in a far-flung country that feels as culturally uncomfortable as it is geographically remote.Fortunately, there is a solution that provides businesses with a cost-effective alternative to nearshoring and overcomes any apprehensions with cultural barriers and delays. Onshoring, also known as domestic sourcing, is when a firm seeks out services from a partner within the same country. For example, a company in Los Angeles may look to an IT group in New Mexico or Georgia for help with a project as the cost of living offers more affordable rates in these areas than Southern California.Onshoring cuts down on time zone concerns, language, and cultural barriers as well as preserving the rule of law over IP and data security. You can benefit from real-time collaboration and produce a high-quality product within budget, on schedule, and at the speed that modern business demands. With onshoring, you'll be less likely to encounter delays that would typically occur with cultural and language barriers associated with nearshoring so that you can get to market faster with a high-quality product at an affordable price. You'll also support jobs in your own country, so you can feel good about creating opportunities close to home.Rural Sourcing: The Leader of Remote Delivery IT ServicesRural Sourcing is the leader in remote software development. To help companies lower their costs and create high-quality products, Rural Sourcing's innovative onshore model allows you to benefit from talented, qualified IT teams living in mid-sized and small cities across the United States. With our onshoring services, you'll eliminate time zones, language barriers, cultural differences, and delays to speed up deadlines and improve collaboration. If you think onshoring can benefit your organization, get in touch with our team today.NEED HELP? LET'S TALK.
Outsourcing, Offshoring, Nearshoring and Onshoring: What’s the Difference?
One of the biggest challenges companies face is finding ways to scale while being as efficient and productive as possible. Perhaps a company is looking to launch a new app, enhance their business intelligence, or has another significant software project that needs to be completed, but they don't have the staff or resources in-house.Many leaders and executives find the idea of developing an in-house team to be too expensive, especially if they are in a major US city where salaries can be high and competition for top talent fierce.In addition to being costly, hiring new staff can be time-consuming, and companies may not even have the recruiting resources to find qualified candidates. In many cases, these companies end up turning to more cost-effective alternatives that provide flexibility and convenient solutions for their needs, one of which is outsourcing.There are many ways to outsource a project – such as onshoring, offshoring, and nearshoring - each with its benefits and challenges. While all three of these most popular types of outsourcing models are similar, they differ in a variety of ways.The Basics: What is OutsourcingLet's start with the "simplest" term, outsourcing, as it has set the foundation for onshoring, nearshoring, and offshoring.Outsourcing is when you find a third-party company or individual to complete a specific project or many projects instead of completing the work in-house. There may be many reasons a company looks for outside help. They may not have the capabilities, breadth of knowledge or experience, or are looking to manage costs and simplify the process from idea to completed product.Not only does this open the door to new opportunities and experts with a breadth of capabilities, but outsourcing also gives you the flexibility to work with an outside firm for a project under a specific period and then move on to completion of the project. For example, your company may need assistance on a huge project, like developing an app, but may not need the additional resources once the project is complete. Plus, it will cut down on the need to hire individual's in-house, minimizing recruitment and operational costs associated with finding qualified applicants in your area (or moving expenses if you need to recruit specialists from other parts of the country).One of the significant benefits of outsourcing is that you'll work with experienced vendors who specialize in a particular field allowing you to complete projects faster and with a better quality output.However, while there are many benefits of outsourcing, there are several drawbacks and unique considerations depending on where and how the work is outsourced. Your company may run into communication issues around domain experience. In other words, if your chosen outsourcer is less familiar with your industry, you should allow extra time for some education. Traditional outsourcing business like accounting and law have overcome this challenge by setting up practices that specialize in vertical industries. The most obvious example is that of the outsourced team working in a different time zone with a significant language barrier. These communication risks become real as we look to an example of outsourcing, like offshoring.What is Offshoring?It's a common misconception that outsourcing and offshoring are the same things. They are not. The primary differentiator between outsourcing and offshoring is that offshoring is a type of outsourcing. Offshoring is when a business hires a third-party firm to perform work in a nation other than one where the business primarily conducts its operations. This business model developed from outsourcing, as companies looked for cheaper alternatives to services overseas, usually in a developing country such as India, Bangladesh, or Eastern Europe.While there are many reasons companies look to offshore their services, it mainly comes down to lower costs. As we have said, some of the most popular countries to offshore IT solutions and software needs are India, China, and Eastern Europe, just because they offer lower production costs due to lower local salaries and less stringent labor laws.Unfortunately, offshoring poses many risks. Working in different time zones, language and cultural barriers, cyber-security threats, political instability and intellectual property concerns are all challenges when working with a company located in another country.This misalignment may require some adjustments on your internal team's schedule, especially with time zones that could be well over 12 hours. You'll likely have to lengthen deadlines as work can take much longer with a team in remote parts of the world. Plus unless you find people in other countries who speak your native language fluently, you may run into language and understanding barriers, which could end up costing your company in delays.SEE OUR VALUE AGAINST OFFSHORINGHow does Nearshoring Work?Nearshoring is a subset of offshoring with the main differentiator being that the outside company is located a little bit closer to you, but still in another country. For example, a company located in New York City may outsource their work to an agency in Mexico or South America.When referring to nearshoring, the third-party companies will be in a closer time zone so that communication can happen either in real time or your schedules may only have to be altered a few hours. Closer time zones can help when it comes to collaboration and can allow for identifying problems faster.However, it's important to note that nearshoring isn't fool-proof and cannot overcome all the challenges that offshoring your work can present. It only solves the time zone issue. Even if the country is in a similar time zone, there may still be differences in holidays, language struggles, cultural misunderstandings, and geopolitical risks.Can Onshoring Benefit My Company?First lets answer, what is onshoring? Onshoring is a unique outsourcing business model as it utilizes partners in the same country for increased efficiencies and productivity without the headaches of offshoring. As an advantageous and increasingly popular alternative to offshoring, onshoring is ideal for companies who are seeking outside resources but want the work produced closer to home enabling faster delivery of higher quality software.For example, a company in San Francisco may be looking for Sharepoint support but finds that a local provider's quotes are above their budget due to being located in such a high-priced area. To save money, they can onshore the work to a partner in a smaller city to produce a high-quality product without having to deal with the headaches, timeline issues, and questionable quality of offshore firms.Onshoring is beneficial for a variety of organizations as it breaks down barriers and hurdles that are typical of offshoring and nearshoring. As a result, companies can speed up deadlines and produce quality products – all while keeping costs lower than the resources in their local areas.Onshoring AdvantagesCompanies that seek out onshoring realize the benefits of real-time collaboration and enjoy working with a scalable network of qualified professionals who possess a breadth of knowledge and capabilities. Additionally, it's easier to explain to your partners your business problems and challenges, so there are no misinterpreted requirements, and you can feel confident in your partner's capabilities.Onshoring vs. OffshoringOnce it comes to finding the solution to streamline internal teams and save money, it comes down to whether you want to offshore your projects or onshore your projects and what is ultimately best for your business. In comparison to offshoring, it's easier to see why onshoring is the smarter choice:• Offers similar teams regarding language and cultural barriers along with the ability to understand complex business problems.• Minimizes time zone concerns for improved collaboration and problem-solving• Allows for faster response time so that you can reduce delays• Lowers travel costs• Supports jobs within your county• Provides you with access to professionals with years of experience and a breadth of capabilities which are all focused on helping your business succeedThe Shift to Onshoring in Recent YearsWhile offshoring to India, South America, and Eastern Europe was a method of saving on labor costs, the shift in recent years has favored onshoring. In addition to more businesses realizing onshoring as a viable solution for improving quality and convenience, wages in some of the top offshoring locations, are rising with a shortage of capable talent.This lowers the labor savings associated with offshoring and without the advantage of cost savings, the disadvantages of outsourcing at such a physical and cultural distance aren't worth the headaches, delays, and hassle. Digital business is unforgiving. Commerce moves fast and does not stop to grant second chances, so it's no wonder more people are choosing to reshore their operations back to the United States to improve quality and convenience while still saving money over in-house teams.Rural Sourcing: Your Source for Onshoring SupportRural Sourcing is the leader in onshoring within the United States. Whether you are looking to build a new application, enhance a product, or scale your business intelligence, our team can help. With development centers located across the United States, you can access a network of people for specific projects or areas of focus that are most important to your business' success. You'll get the results you desire at the cost you can afford with onshoring services from Rural Sourcing.Onshoring Capabilities at Rural SourcingAt Rural Sourcing, we aim to provide cost-effective and convenient solutions to our partners across a variety of focus areas:• Application Development• Business Intelligence & Analytics• Cloud Solutions• Enterprise Applications• QA & TestingWhat sets us apart from other onshoring companies is that our teams are experts in modern application development, and no one is more expert in remote software delivery. We work hard with our community partners in the selection of our center locations and in bringing jobs and a positive culture to those communities, our colleagues, and our customers. With our extensive network of brains' trusts and experienced professionals, you'll tap into a valuable resource across a multitude of IT industries. Along with having an experienced team with a deep understanding of your field, we utilize state-of-the-art technology to meet the ever-changing and ever-increasing market demands.Contact Rural Sourcing to Learn More About our Onshoring IT SolutionsIn today's fast-paced world, your company can benefit from the experience, knowledge, and capabilities of an onshore team. Not only is it a faster alternative to offshoring, onshoring breaks down time zone, language, and cultural barriers that can delay deadlines, lengthen problem-solving timelines, and hurt your overall bottom line. Tapping a firm that's closer to your organization will reduce response time and allow you to take your product to market faster, so you can achieve your overarching goals quick.If you're ready to see if onshoring is right for you, contact Rural Sourcing. We've helped clients across the United States achieve their strategic goals with our unique IT solutions. Get in touch with us today to see how we can help your business.NEED HELP? LET'S TALK.