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You are here: Home Focus Working with Third Party Businesses - Why the Decision to Go Onshore, Nearshore or Offshore Is So Important

Working with Third Party Businesses - Why the Decision to Go Onshore, Nearshore or Offshore Is So Important

06 December 2017, 15:49 CET

For many companies, outsourcing some functions can be the most cost effective and efficient way of getting them done to a professional standard. Without the expense and time involved in recruiting and supporting in house teams for these roles, using a third party can allow you to gain access to new operational functions within your business very rapidly, and without the need for a particularly detailed level of management - you simply need to manage the contracts and accounts with your service providers.

When choosing who to use as a third party, however, there are a lot of things to consider in order to get the best service possible, as well as a price that is acceptable to the business. One of the biggest things to decide is between working with businesses that are onshore, nearshore, or offshore.

Pros and Cons of Offshore Outsourcing

The main advantage of going offshore, which means using companies in developing countries such as India and Pakistan, and now increasingly also South East Asia, is price. These companies have access to a large pool of skilled graduates but are able to pay far less than in other regions due to the lower cost of living. The advance in offshore business models has led to something of a revolution in India, and has also been economically beneficial in other countries.

Of course, the downsides to it come with the distance. There may be communication issues due to the people you are working with having to talk to you in their second language and possibly having accents your staff aren't used to listening to. Time zones can also present difficulties. However, for business functions where communicating with the whole team regularly isn't important, this can be a great option.

Nearshore

Nearshore is a newer term, and really describes working with companies in other countries that have a lower cost of living, but are culturally and physically closer to where you are. In the US, this can mean working with companies in central America or the Caribbean, whereas in Europe it usually means Eastern European companies.

This can be a happy medium, as language and communication may still be an issue, but time zones won't be and cultural differences will be smaller. It is also a medium cost wise.

Onshore

If costs were equal, onshore would be the obvious choice, and many service providers, such as Eventige who are a leading ecommerce platform design and management company, use onshore teams as a strong selling point – visit their site for more information. Onshore allows for no language problems, and also makes it possible to physically meet with the people you are working with should you want to, with neither party dealing with traveling to another country.

Naturally, onshore means a higher cost in most cases. However, because the cost of living where your third party company are will be the same as where you are, wages for the skilled people you need will be equivalent.

As you can see, all three options have pros and cons and there are some functions that can be run more easily than others. Be sure to weigh this up when choosing who to outsource to.

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