Near-shore vs Off-shore outsourcing

Home 2011 February Near-shore vs Off-shore outsourcing
In one of the online forum, I found an interesting discussion about growth of near shore outsourcing Vs offshore outsourcing. For those of you, who would like to know what nearshore and offshore means.If a client is US provides an outsourcing contract to an Indian IT company then its considered as “Offshoring” and if it provides an outsourcing contract to a company in Argentina or any LATAM country then it is considered as “near shoring”. There are additional benefits in “nearshore” outsourcing : they are, mostly in same time zone, there is lesser cultural difference and quicker travel to client location when required.
 
Most of the prominent IT service provider have already set up or are in the process of setting near shore centre, so the question is that whether there would be higher growth to these “near shore” centre compared to “offshore” centre in future?. If the growth happens in “near shore” centre then it could impact Indian IT industry in the future. Region wise, for US market Latin American countries are considered for near shore centres, for Europe – eastern Europe & Ukraine are considered and for countries like Japan, Hong Kong – China is considered as near shore centre.
As these “near shore” centre become more mature there would be an increased competition to “Offshore” (Indian) centres.It is Price and Quality of deliverables within the defined scope & schedule of the projects that are the driving factors for off-shoring. If the nearshore center can provide their business in comparable terms (cost & quality) then , the client would definitely prefer nearshore center (for project deliverables) because of the added facility the customer can enjoy like same timezone, culture and in some case even language to an extent.
 
Hence, apart from the general slow down in IT sector now, this is going to be an additional challenge in the near future for Indian software consultants and Indian IT companies, particularly the companies which do not have presence in these “near shore” countries.

[The article has been contributed by M.Guha Rajan. He is a software management professional as well as a PMP certified Project Manager. He is post graduate in management and holds a degree in computer engineering with over 15 years of post degree work experience. ]
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