In today’s age, the world of technology-driven businesses is so fast-paced and dynamic that we sometimes just can’t achieve workable and scalable growth with an in-house team. Thus, the solution would be to look to outsource, but how?
Hiring outside help makes a lot of sense. In a nutshell, this way you get a team of talented and competent people who make great headway without going through a long process of interviews. By hiring consultants, one can also achieve the flexibility that is necessary when a corporation is in the phase of scaling up and down if/when needed. After considering the options, most organizations are left with three approaches to outsourcing: onshoring, nearshoring, and offshoring.
Onshoring is the practice of outsourcing business processes or tasks to service providers within the same country as the hiring company.
Nearshoring involves outsourcing to service providers in neighboring or geographically close countries, typically within the same continent or time zone.
Offshoring is the outsourcing of tasks or processes to service providers in distant, often lower-cost countries, usually located in different time zones.
After dealing with clients for more than 10 years, one can draw a very comprehensive conclusion on what solution is the best model for the long run. Clients have always wondered if they can overcome the crucial challenges in order to thrive in the process of reaching their goals. When it comes to offshoring, most businesses share some common worries:
- Can the workflow within the external team still be agile?
- Will the team accept external help as they are dislocated?
- Will there be someone on-premise when needed?
- What is the average/median tenure within the teams, as consistency and knowledge sharing are key?
- Can scalability be achieved at any particular time?
The best solution has generated the best results!
Onshore / Nearshore model – Sixsentix SWAT approach
Over ten years, Sixsentix has modified their solutions and invented the most optimal approach for our clients to keep them on the edge of innovation while assuring quality of their products. Working with different clients and leveraging their diverse experiences, we established the best practices that have proven to consistently generate the best outcomes.
Sixsentix uses a combination of onshoring and nearshoring model, with onsite consultants present at our clients’ and a team of nearshore consultants supporting with test automation. This way, there is constant control and scalability all in one. Our nearshore services deliver optimized testing outcomes at significantly lower costs and help customers scale to keep pace with their applications. With this combination, onsite/nearshore support ensures streamlined communications, cost-effectiveness, cultural alignment, ease of communication, quality, smooth collaboration, and accelerated project progress.
Sixsentix SWAT approach fosters best-in-class risk-based testing to accelerate speed and cut down efforts in large-scale software environments. This proven testing operating model with a comprehensive pool of experts (onsite and nearshore) results in multi-layered cost optimization within the SDLC. Here’s what Filip Milikic, our CEO, says about how we nurture this approach at Sixsentix:
It's just like in professional football, where Barcelona football club had a dream team that they developed from the juniors to the first team. They followed the whole process for 10 years to keep the same momentum among the players. Barca had a fantastic streak of wins with the dream team. With the same mentality in mind, Sixsentix trains their testing consultants early to keep the knowledge and momentum all the way up to architecture design professionals. That is why we are proud of our success and look forward to a fruitful future.
Filip Milikic, CEO of Sixsentix
In a nutshell, the onshore/nearshore model offered by Sixsentix can account for various factors that are commonly considered when choosing a software development or testing outsourcing model.
Location and Proximity:
Onshore/Nearshore (Sixsentix): This model involves working with teams located in or near your geographic region. It offers better time zone alignment, cultural compatibility, and the ability to have face-to-face meetings.
Offshore (other companies): Offshore teams are usually located in a different geographic region, often with a significant time zone difference. This may lead to communication challenges and a lack of direct contact.
Cost:
Onshore/Nearshore (Sixsentix): Generally, onshore and nearshore models are costlier compared to offshore models due to higher labor costs in these regions. However, the Sixsentix model can be easily scaled, and in the long run, the benefits outweigh the cost.
Offshore (other companies): Offshore models are less expensive at first glance, as labor costs are lower in offshore locations. The drawbacks are quite simple - there is no control, interaction within the team is very low, and it’s hard to practice daily sprints in order to pursue agility. But all this creates new bottlenecks and lowers efficiency, ultimately pushing the expenses back up.
Communication and Collaboration:
Onshore/Nearshore (Sixsentix): Easier communication and collaboration due to cultural and time zone proximity. As Sixsentix follows agile development on iterative releases and phased-out deployment, they are confident in their approach, thanks to utilizing sprints within the teams. Thus, face-to-face meetings are more feasible and effective.
Offshore (other companies): Over time, communication challenges stemming from time zone differences, language barriers, and cultural differences can accumulate. These issues may affect project efficiency and effectiveness. Virtual communication tools are essential.
Quality and Expertise:
Onshore/Nearshore (Sixsentix): May offer access to a higher pool of skilled resources and expertise. The median employee tenure at Sixsentix is 3.4 years. This shows that employees are committed to their projects, and their clients get the benefit of continuous feedback/consultancy for the long run.
Offshore (other companies): While cost savings may be realized in the short term, there could be long-term quality concerns if the offshore team lacks expertise or experiences high turnover rates. According to the National Association of Software and Services Companies, overseas vendors face a high turnover rate of up to 40%. This can lead to increased rework and quality control efforts.
Flexibility, Scalability, and Project Complexity:
Onshore/Nearshore (Sixsentix): Often more flexible and scalable for short-term or changing project needs. Suitable for projects with a high need for collaboration, real-time communication, and when the project's complexity requires a close partnership.
Offshore (other companies): Offshore models can also be scalable, but coordination and response times may vary. Lack of control is always lingering in the back of our minds. Often chosen for projects with well-defined requirements and lower complexity, where cost savings are a significant consideration. Thus, there is no creativity preset, as tasks are quite monotonous.
Data Security and Compliance:
Onshore/Nearshore (Sixsentix): May offer better alignment with data security and compliance requirements, especially if operating within the same legal framework.
Offshore (other companies): Requires careful consideration of data security measures, compliance, and legal issues associated with offshore outsourcing. Long-term offshoring may raise concerns about the protection of intellectual property and data security, potentially requiring additional investments in security measures.
Time to market and hidden costs:
Onshore/Nearshore (Sixsentix): Can lead to faster time-to-market due to easier communication and collaboration.
Offshore (other companies): Time-to-market may be affected by communication challenges and longer response times. Over the long term, hidden costs associated with offshoring, such as additional management and coordination efforts, travel expenses, and legal compliance, can offset some of the initial cost savings.
In summary, the choice between Sixsentix's Onshore/Nearshore model and an Offshore model depends on your project's specific requirements, budget, and priorities. Consider these factors carefully, and if possible, engage in a thorough evaluation process, including vendor assessments, to make an informed decision. From an innovation and collaboration standpoint, long-term offshoring may affect your company's ability to innovate and collaborate effectively, especially for projects that require close proximity and face-to-face interaction.