The digital age ushered in a remarkable transformation in the way businesses operate. It placed significant emphasis on technology and infrastructure. However, this rapid advancement also led to a surge in demand for skilled IT professionals. This created an employment gap that left employers grappling.
Although traditional approaches like upskilling and job requirement modifications were widely adopted, there are other solutions in the form of offshore and nearshore hiring. These alternative strategies provide an effective means to bridge the IT talent gap and cater to the ever-increasing demands of the digital era.
Offshore and Nearshore Hiring as the Solution to IT Labor Scarcity
65 percent of hiring managers around the globe reported that finding IT-savvy professionals is difficult. Additionally, more than two-thirds of hiring directors voiced their concern over the disparity between their team’s digital skill and whether they possess the required expertise to meet their desired goals, based on a study by Microsoft.¹
To combat this, businesses are turning to offshore and nearshore hiring strategies to address the IT labor scarcity and tap into a wider candidate pool.
Offshore hiring many times, involves engaging a partner who can be located in a variety countries, sometimes with significant time zone difference, to leverage their skilled workforce. On the other hand, nearshore hiring refers to hiring employees in neighboring countries or regions, which allows for better alignment in terms of time zones, cultural affinity, and proximity.
These teams work remotely and collaborate closely with their clients to deliver high-quality software development, infrastructure management, technical support, and other IT-related services.
All About Offshore Hiring
Offshore support is a proven strategy that allows businesses to access highly skilled IT professionals at a lower cost compared to local hiring. It involves leveraging the expertise and capabilities of offshore teams, organizations can expand their pipeline and overcome the limitations of local labor markets.
For example, a software development company based in the United States can collaborate with an offshore team in India to handle specific IT projects with a follow the sun methodology. The offshore team works during US nighttime to deliver results within agreed timelines.
Benefits of Offshore Hiring
For businesses having difficulty finding skilled candidates, offshore hiring may be the solution. This practice isn’t exactly new.
1. Access to a Global Candidate Pool
Offshore hiring provides businesses with access to a diverse range of skilled professionals. This means that companies can find the exact professional they need, even if it is not readily available in their local market. This allows companies to overcome local market limitations.
2. Reduced Costs
Leveraging the wage differentials between developed countries and offshore locations allows companies to significantly reduce their labor costs. This enables businesses to optimize their budgets and allocate high-end onshore resources to other critical areas such as research and development or marketing initiatives, ultimately enhancing their overall competitiveness in the market.
Moreover, reduced costs through offshore hiring can also lead to improved return on investment (ROI) for businesses. Companies can achieve higher productivity and cost-efficiency, translating into enhanced profitability and better business outcomes.
3. Scalability and Flexibility
One of the key advantages of offshore hiring is the ability to rapidly scale IT teams based on project requirements. Whether a business needs to expand its development team for a new software release or downsize after project completion, offshore hiring provides the flexibility to adjust the team size accordingly.
A technology startup may engage with an offshore team in Eastern Europe, to quickly scale their team up or down as needed to meet the demands of their product development roadmap. This ensures maximum efficiency and adaptability, allowing businesses to align their workforce with the dynamic nature of the industry.
4. Enhanced Focus on Core Competencies
Offshore hiring of IT functions allows companies to delegate non-core activities to specialized teams, freeing up internal resources for more strategic initiatives. This shift in focus towards core competencies can significantly enhance productivity.
A software development company may decide to offshore its software testing and quality assurance processes to a dedicated team in India. They can leverage the expertise of offshore professionals who specialize in testing methodologies and have extensive experience in ensuring software quality.
This allows the company’s internal team to concentrate on core tasks like software development and innovation, leading to faster product development cycles and improved time-to-market.
5. Risk Mitigation
Offshore hiring can ensure smooth operations and minimize disruptions. Companies can address common challenges such as employee turnover, training, and management while benefiting from established processes and protocols that ensure operational stability.
A cybersecurity firm might outsource its 24/7 monitoring and incident response services to an offshore team in a different time zone. This allows the company to have continuous coverage and quick incident response, reducing the risk of potential security breaches. The offshore team can ensure the smooth operation of the company’s security infrastructure.
Sustain the Business with Nearshore Hiring
Nearshore hiring provides companies with the advantages of offshore outsourcing while maintaining closer proximity and cultural affinity such as a European company partnering with a firm within Eastern Europe.
Businesses can overcome challenges related to time zones, and language barriers, and build stronger working relationships. This proximity enables more seamless communication and collaboration, leading to enhanced project outcomes.
Benefits of Nearshore Hiring
If hiring candidates across the globe isn’t a viable solution, perhaps nearshore hiring may be the better option. Here’s how it can benefit businesses.
1. Cultural Alignment
When partnering with companies in neighboring countries or regions, businesses can bridge cultural gaps and establish a stronger connection with their nearshore teams. Cultural alignment is especially important as it influences how teams work together, share ideas, and solve problems.
A software development project involving a nearshore team from a neighboring country may benefit from shared cultural values, similar work ethics, and communication styles. This can lead to smoother interactions, improved teamwork, and a shared understanding of project goals and expectations.
2. Time Zone Compatibility
Businesses can enable real-time communication and foster efficient project management. Operating in the same time zone significantly allows teams to work seamlessly across different locations.
In IT, collaboration and timely communication are essential, and the same time zones can make a significant difference. Consider a company in the U.S. collaborating with a nearshore partner in Mexico. This allows for overlapping work hours, enabling teams to engage in real-time discussions, resolve issues promptly, and maintain consistent project momentum.
3. Similar Regulatory Environment
Data protection, privacy, and compliance are paramount and the similarity in the regulatory environment offered by nearshore hiring is invaluable. For instance, a company in the EU outsourced from a neighboring EU member state. They can benefit from regulations under the General Data Protection Regulation (GDPR).
A shared regulatory framework enables seamless data handling and ensures compliance with stringent data protection requirements. It reduces the complexities associated with cross-border data transfers and helps maintain the highest standards of data privacy and security.
4. Cost Efficiency
Nearshore support strikes a balance between cost savings and proximity. Businesses can benefit from lower labor costs compared to hiring locally, while also enjoying the advantage of geographical proximity.
This reduces travel costs and logistical challenges. Companies can also have access to candidates with competitive rates in nearshore locations without compromising their work quality.
5. Faster Response Times
Unlike offshore support, where significant time zone differences can result in extended response times, nearshore support minimizes these challenges and allows for swift and efficient communication allowing for faster development cycles and timely delivery of results.
A nearshore team located in a neighboring country can benefit from the ability to have overlapping work hours or schedule face-to-face meetings. This means that the company and the nearshore team can engage in immediate discussions, address any questions or concerns, and make prompt decisions to keep the workflow on track.
The Importance of Pursuing Nontraditional Candidates
In the face of the ongoing shortage of IT professionals, businesses must take proactive measures in expanding their candidate pipelines. Gartner’s Future of Work Trends 2023 highlights the significance of pursuing nontraditional candidates, including those from offshore and nearshore locations.²
Embracing alternative candidates enables companies to tap into a variety of skills, experiences, and perspectives. This can help bring innovation and agility to their organizations. Moreover, this proactive approach ensures businesses have the right people to meet the ever-growing demands of the industry.
ON-DEMAND GROUP CAN HELP EXPAND YOUR TEAM WITH IT-SAVVY CANDIDATES
Offshore and nearshore hiring present viable solutions to address the ongoing IT labor shortage. In pursuing nontraditional candidates, organizations can thrive in the digital age and unlock growth opportunities.
If you are still struggling to decide which option is best for your organization, On-Demand Group is at your service. We can provide valuable insights and assistance in navigating the complexities of offshoring and nearshoring.
Contact us today to find your ideal solution!
References:
- Van Sterkenburg, Matthijs. “Global Knowledge Study Reveals Present and Future Skills Issues Facing IT Departments Worldwide.” Microsoft, accessed Apr. 6, 2023, https://pulse.microsoft.com/en/skill-forward-en/na/fa1-global-knowledge-study-reveals-present-and-future-skills-issues-facing-it-departments-worldwide/://
- McRae, Emily Rose, and Peter Aykens. “9 Future of Work Trends For 2023.” Gartner, Dec. 22, 2022, www.gartner.com/en/articles/9-future-of-work-trends-for-2023
