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.” This 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.
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. As 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 Transparency Partnering 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.
Onshoring with Rural Sourcing – Good for Budgets, Good for the Economy
As the tech industry booms, the demand for developers, IT staff and tech professionals has skyrocketed. For decades, businesses tried to lower costs by offshoring their technology needs to other countries. However, they have realized the unique challenges of offshoring such as time zone difference, language barriers, and cultural misunderstandings. These annoyances can cause 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 to not offshore and instead look for a better alternative. Rural Sourcing understood these challenges and developed another choice that not only helped companies achieve their IT goals, but also helped local economies capitalize on and retain their best tech talent. Rural Sourcing: Onshoring 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 metros 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 also does it in a way that supports small to mid-size local economies and creates opportunities for tech professionals who call them 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, Georgia, Oklahoma, and New Mexico where the cost of living is less expensive and there is 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 such as 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 hundreds of jobs are created that can have an enormously positive ripple effect on local economies. It is a win-win-win for tech professionals, companies, and the cities where our development centers are located. Measuring the Economic Impact of Rural Sourcing Inc. on Communities To find the true economic impact of Rural Sourcing in Augusta, we reached out to the James M. Hull College of Business at Augusta University. The team at Georgia Regents University measured the economic impact of Rural Sourcing Inc. by using an input-output model using 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 about how much our development centers helped boost the economies where they are located. As a result, the team was able to provide a comprehensive assessment of the local economic impact of Rural Sourcing Inc., 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 Inc.'s Positive Economic Impact The impact of Rural Sourcing Inc. on the local community is far more than just the number of jobs created. As the number of jobs increase in a local community, people have more disposable income to spend, which trickles into the economy and supports local businesses. When it comes to measuring Rural Sourcing Inc.’s total economic impact in just one community, the results are astounding. The study found that Rural Sourcing Inc. 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 five-development center across the United States, Rural Sourcing Inc. is responsible for contributing $100 to $150 million annually to the surrounding local communities. Typically RSI agrees to ten year commitments for job creation so extrapolating today’s level of investment in these communities across the ten year commitment means that RSI has a $1.0 to $1.5 billion impact on our selected communities. Our Commitment to Bring Jobs Back to the United States Rural Sourcing is taking huge steps to support the American dream and smaller regions that could have the opportunity to compete nationally for tech talent – but only need the opportunity. While other conglomerates have favored larger metro areas, Rural Sourcing has fostered innovation and growth in small cities across the United States. We are directly and indirectly stimulating job growth in America helping local economies grow by more than $100m. As the leader in onshore 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. Our strategically placed development centers are supporting productivity, which is infiltrating into the local communities. We’re incredibly proud of the impact we’ve made on areas like Mobile, AL, Jonesboro, AR, Augusta, GA, Oklahoma City, OK and Albuquerque, NM, and we look forward to expanding our efforts more in the future. If you’re interested in learning more about our capabilities and how we may be able to make a difference in your business, get in touch with us today.
The Hidden Dangers 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 disadvantages 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 Nearshoring If you are 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 that can have serious ramifications on the people and businesses there, which can potentially affect 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 new elected officials can dramatically change the political landscape overnight. While it may seem like politics may seem 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. How Can Economic Uncertainty Affect Outsourcing? While the economy in some of these 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 continues to fall, proving to be the worst performer in 2018 among emerging market peers. Businesses and household finances in Argentina are feeling the strain, and businesses are having a hard time giving quotes or financing amid the currency disorder. Inflation has been stuck above 30 percent and is set to accelerate on a weaker peso. 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, 2 liters of milk, and 4 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 only prove to be a challenge when offshoring business efforts to regions with volatile economic climates. Crime and Danger Considerations Ongoing violence and petty crime in many countries can have near and long-term impact on your business, even if it is 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 be otherwise fostered by the cross-pollination of US clients and offshore providers. Latin 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, 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 effect traveling business people, kidnapping is not uncommon for traveling business people or tourists perceived as “wealthy” to be held for ransom. Will it definitely happen? Of course not – but it is more likely in Rio than in Oklahoma City. 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 Nearshoring While 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 it will affect your business. That liability and uncertainty of the political and economic climates of these countries can prove to be a crippling challenge for businesses who may not have ever considered these issues. Onshoring with Rural Sourcing Inc. Fortunately, 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 providing 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 will enjoy cost savings in comparison to larger metropolitan areas. To learn more about Rural Sourcing’s capabilities and how we can help your company thrive, get in touch with us today.
Amazon HQ2 is Coming to NYC, Northern Virginia and Nashville – How Will You Compete for Tech Talent?
Amazon just announced the grand opening of their headquarters in NYC and Northern Virginia, with another significant facility in Nashville. This will create 55,000 high paying jobs across these markets at a time when unemployment is low and finding tech talent is becoming increasingly difficult. While these 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 opening of the Amazon headquarters 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 HQ’s. This means if your business has staff with these skill sets or are looking to hire new talent, the competition is going to be fierce for new hires as well as retaining 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. To learn more on how Rural Sourcing’s capabilities can help your business success in a highly competitive market, contact us today.
5 Disadvantages 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. However, many organizations have learned that there are several disadvantages to offshoring. If you are considering offshoring for your business, it's best to do your homework. 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. Offshoring happens when you relocate the work to a different country and is a form of outsourcing. For example, offshoring could be when a company from within the United States may work with a company located in India or China for a specific project. So, offshoring is always outsourcing – but not all outsourcing is offshore. Get it? 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. Disadvantages of Offshoring Time Zone Differences One 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 also do not provide the responsiveness and speed required in the digital economy. Communication and Language Issues When 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 (such as accents of various Indian dialects). 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. Cultural and Social Differences Even 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 US's 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 it will affect your deadline. Work styles will 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. The discrepancies in culture and social practices can also lead to a lack of understanding of a complex business problems which in turn leads to business and personal misunderstandings and challenges that would not be the case when everyone on a team has a similar understanding of the project and overall business dynamic. Increase Domestic Unemployment Critics of offshoring note thatthe level of unemployment of the local economy increases. For example, if you outsource jobs to India, 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 in the US as opposed to sending it overseas. Proximity Thinking 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 Unrest The unstable political climate in prominent outsourcing countries can causeincreasing 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 States Fortunately, 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 is highly effective. 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 New Mexico or the South, 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 Partner If you’re looking for an offshore 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 bring jobs back to 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, hi-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.
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. Offshoring As 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 Advantage The 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. 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 Nearshoring While 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 Services Rural 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.
Onshoring, Offshoring, Nearshoring and Outsourcing: 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 Outsourcing Let'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. How 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? 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. Companies 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. Offshoring Once 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 succeed The Shift to Onshoring in Recent Years While 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 Support Rural 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 Sourcing At 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 & Testing What 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 Solutions In 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.
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. 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 onshore 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 its benefits, and see why Rural Sourcing is the country’s leader in onshore outsourcing. Benefits of Onshore 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, onshore 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. Increasing Affordability of IT Projects One of the biggest advantages of onshore 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. Onshore 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, onshore outsourcing may be the right solution for your needs. Rural Sourcing: What We Do As the leader in onshore 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 onshore 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 Onshore 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 onshore outsourcing capabilities, get in touch with us and tell us more about your project needs.
A 3 Step Process to Quality
In today’s digitally charged environment, executives leading software development companies consistently walk a tightrope as they balance two very different interpretations of the word, “quality.” Users’ perception of quality focuses on software that meets business requirements, while development teams concentrate on building programs and applications that satisfy product and system requirements. These diametrically opposed perspectives put software executives in the crosshairs of a heated debate as both sides attempt to evaluate quality. In reality, business requirements spring from the minds of customers and stakeholders who seek a software solution to a conceptual business challenge. Business requirements, which refer to the “what” of software development, do not translate smoothly into product requirements. In most, if not all, cases, several technology-based solutions can resolve the stated business problem. To select the most technically appropriate and efficient path to resolution, business requirements must be broken down into detailed capabilities, or “hows,” that align with business needs. The tightness of that alignment produces value for the end user customer. Loosely aligned technical capabilities are seen as less valuable by customers, often eroding the software’s price point and damaging the development company’s reputation. To protect the bottom line and reputation of a software development operations, company executives can take a three-pronged approach to extend quality assurance across the entire development process. This three-step methodology, which embraces a universal definition of quality as contrasted to value, incorporates best practices associated with a “right the first time” development approach, and calls for a cultural shift to reward the early identification and resolution of issues, is particularly relevant in today’s fast-paced marketplace. First: define quality, value For software company executives navigating this tightrope of conflicting expectations, it would be useful to distinguish between the concept of quality and its value in the marketplace. Conceptually, quality is a measurable outcome of development. The amount of quality associated with any software development project is constrained by available resources and the business priorities of a software development company. One approach to evaluating software quality uses three dimensions: Quality of design – the functions, capabilities and performance levels required by stakeholders. Quality of conformance – how a software product conforms to design, leverages appropriate standards and is completed on time and on budget. Quality of performance – how the software functions post-delivery, especially as it meets user needs, functions as intended, manages its workload, and is supported and maintained over time. While most customers will agree that some degree of quality is a baseline expectation, it is critical to understand that a high degree of quality may or may not be perceived as valuable in the marketplace. Customers perceive quality as driving value, and value is relative when compared to the software’s cost. For example, a customer’s limited budget can eliminate a high-value software solution from consideration when company finds a lower quality product acceptable because of its price. Second: Implement ‘fail fast’ In the digital world, customer expectations change on a dime, which can force development teams to pivot frequently. This rapidly changing environment, which has increased pressure on development companies to deliver software faster and at more competitive price points, calls for a new approach such as “fail fast” and “continuous integration.” However, misdirected emphasis has muddied the perception and value of the widely held fail fast principle. More than a few people place importance on the first word, “fail,” when it’s the second that matters. The success of a failing fast development initiative hinges on identifying issues, bugs and errors early in development, the sooner the better. To support failing fast, taking a “continuous integration” approach can help software development companies increase quality and keep costs in line. In this agile development practice, developers integrate their current work into a shared depository several times each day. Automated builds verify each integration, flagging problems and assuring immediate correction. As a result, the software stabilizes at a faster rate. Additionally, many software development companies share software in development with intended users at regular intervals in development. For example, presenting in-development software to users after major agile iterations can be another way to implement the fail fast approach. These frequent releases to end users brings defects to the surface faster than waiting until the development team is deep into the project to find issues. Three: Shift culture to reward early detection, correction Often, implementing a fail fast approach requires a culture shift in the software development organization. The importance of this cultural shift cannot be overemphasized. In the fail fast environment, quality assurance spans the entire development process rather than being an exercise that takes place at the end of development. When developers understand that identifying and resolving bugs early in the development cycle is rewarded, improves productivity, boosts quality and saves money, the organizational emphasis continuous improvement will begin to resonate. In the digital environment, customer expectations change frequently, and development teams must pivot quickly to maintain the tight alignment between technical capabilities and business requirements. Applying the fail fast and continuous improvement tenets to the software development process can increase the velocity of response to evolving customer requirements.
Understanding the risks of offshoring in today’s digital marketplace
Offshoring, the approach many U.S-based companies take to secure IT talent, has lost much of its original appeal. In the past, U.S. companies sent IT jobs overseas for one key reason: to capitalize on inexpensive labor. In many cases, offshore vendors claimed hourly rates that were 80% less expensive. IT leaders, originally seduced by offshoring’s attractive bottom-line savings, quickly found out that offshoring’s challenges and risks often increased project costs, eroding the much anticipated savings. A few of these risks include: Time zone differences Language compatibility Cultural barriers Domain expertise Employee turnover Geopolitical risk IT leaders, now familiar with the risks associated with offshoring and its eroding potential savings, are replacing offshoring with a proven alternative to talent acquisition: domestic sourcing or onshoring. Domestic sourcing taps into talent inside the United States to deliver the speed to market and responsiveness IT organizations require in today’s digital marketplace. In addition, it leverages a deep familiarity of complex business problems, a depth and breadth of capabilities, access to a scalable brain trust, efficient collaboration, and attention to quality. However, determining the value of domestic sourcing has been difficult to illustrate. Today, companies can utilize the Rural Sourcing TCO Calculator, a robust tool that enables the customization of six distinct and commonly accepted productivity factors to a company’s current situation. This allows for a more accurate assessment of their total cost of ownership of outsourcing needs. A key advantage to domestic sourcing however, is its ability to deliver the agility needed to pivot IT priorities in response to changing customer expectations. It allows companies operating in this hyper-responsive digital environment to add and recast IT talent as needed. For example, this agility was recently demonstrated when one of our FinTech software clients asked Rural Sourcing to refocus our existing team and add a second scrum team to meet the regulatory demands of one of their largest clients. Taking a flexible approach allows IT teams to adjust project priorities and delivery timelines on the fly – based on the actionable recommendations that come from real-time analysis of customer expectations.
3 Key Ways to Manage Speed to Market
Today’s age of digital adaptation mandates innovation and quality – at great speed. Way back in 2000, Jack Welch, in GE’s Annual Report, warned us, “If the rate of change inside an institution is less than the rate of change outside, the end is in sight.” For some companies, delivering innovation and quality simultaneously is exhilarating, while, for others, it’s a fast path to disaster. Consider these pivotal questions: Why is it that some companies can marry methods, such as Agile and DevOps, to continuously deliver successfully, while others struggle? What puts some companies at the forefront of market demand, while others strain to keep pace with the pack? Success, it seems, often comes down to the ability to unleash technology’s inherent productivity. ". . . companies have been early adopters of these capabilities and have reaped the benefits. Amazon, for instance, can release code every ten seconds or so, update 10,000 servers at a time, and rollback website changes with a single system command," as Satty Bhens, Ling Lau and Shar Markovitch of McKinsey point out. While most companies' leaders would love to bask in the reflected glory of these technology icons, the reality is most of us are not Amazon or Google. But, we can all learn from these market innovators that speed is an important factor in their success. They are constantly adapting and striving to be first to market. To meet the speed-to-market demands digital adaptation presents, executives should consider: Building collaborative development organizations to expand market capabilities. Empowering a cross-functional mindset that bridges internal and external resources. Creating partnerships that flex and reflect the need for speed. Collaboration is one of the keys to delivering software at speed in your business and getting it right the first time. For example, traditional brick and mortar financial institutions, under siege from digital-only startups, tapped internal development resources to create their own digital products and services – often carving out a competitive advantage for themselves in the process. Marcus, an online lending platform from Goldman Sachs is an example of how digital disruption re-energized collaborative internal development to expand the firm’s footprint in an underserved market segment. Originally begun as a way for retail clients to refinance credit card debt, Marcus leverages Goldman Sachs’ technology expertise to appeal to its smaller segment of retail clients. Smaller banks have little incentive to help retail clients refinance debt, which was the driving factor behind Goldman Sachs effort to build the Marcus platform specifically for that purpose in 2016. Having a cross-functional mindset helped Goldman Sachs identify an untapped market opportunity and quickly develop a solution to meet that need. Today, Marcus has expanded from a one-product platform to a multi-product business, which has created a competitive advantage for Goldman Sachs. Finally, consider combining internal skills with partner capabilities. With the precipitous growth of niche skills, the expense of hiring and retaining these resources on staff may not be feasible for the long term. Looking to partners for these skills allows you to flex your staffing as you grow and keep pace with market demands. In addition, supplementing internal resources with assistance from a partner can enable you to deliver to the marketplace a high-quality product quickly -- likely ahead of your competition. Today’s rate of marketplace change requires innovation and speed to market – a tough order for most companies to fulfill. However, taking a collaborative approach that unites internal and external resources behind shared goals can build the sustainable competitive advantage needed to prevail.