Outsourcing and nearshoring - the tonic for economic troubles ahead
Despite IT spending growth, outsourcing may be the best option for businesses struggling with rising costs.
Businesses today are operating in a completely altered landscape compared to just two or three years ago. The shift in workplace habits due to the Covid-19 pandemic, talent shortages and a looming recession has created a need for businesses to think creatively to stay ahead. While the outlook doesn't seem positive, businesses have the opportunity to prepare for worst-case scenarios - and one crucial piece of the puzzle is outsourcing and nearshoring, bringing businesses relief in the areas they need it most.
Many businesses are looking for ways to ease their financial burdens. After a time of growth for many, cost control is at the top of the agenda. While Gartner recently forecast business spending on IT to increase by 5.1% in 2023, this does not mean decision-makers will not be thoughtful in where they chose to put their resources. The requirement for creative, thoughtful, and resourceful choices will need to be prioritised. Outsourcing and nearshoring are viable options for businesses looking to be smart with budgets without compromising customer service and employee experience.
Outsourcing is regaining its reputation
After a temporary fall in use, statistics suggest that IT outsourcing has begun to rise in popularity once more. Recent research by STX Next highlights that business leaders are planning to return to IT outsourcing, finding that 89% of chief technology officers plan to outsource software development or IT expertise in the future; 59% are not currently doing so; and 43% have done so in the past but have since stopped.
Some businesses continue to hold a negative view of outsourcing abroad due to unsatisfactory experiences in the past, but the level of IT expertise in companies based outside the UK has grown significantly in the last few years. With this new growth, there is every chance that outsourcing in this way will yield positive results.
The benefits of outsourcing and nearshoring IT
One of the main reasons businesses have chosen to outsource in the past is to reduce costs: businesses can keep up with their IT needs without major investments in IT infrastructure, employees and software. Firms with IT departments need to hire, train, and employ salaried workers, whereas businesses that outsource pay a fixed fee for services on a contract basis, saving on the general expenses that come with an in-house department while offering affordability.
If businesses choose to approach outsourcing by way of nearshoring (outsourcing to a company based in a different country, but one that is still relatively close to the organisations' home region) they can reap further benefits.
Nearshoring creates the opportunity to work with an IT partner based in a similar time zone, often with similar cultural inclinations, a strong grasp of the English language, and who has adopted similar working practices and standards of customer service as UK-based companies. As long as businesses take steps to ensure their nearshoring practices align with industry regulations and legal requirements, it can be an ideal fit.
Ultimately, nearshoring presents an effective option for businesses wanting to engage with an IT partner closer to home. It gives advantages to firms by providing access to a wide range of technical talent in regions with a fast-developing reputation for IT excellence. This presents a unique opportunity for businesses to reduce costs on labour fees and office rental with the same quality as hiring locally.
Adapting to evolving challenges
Businesses are facing constant fluctuations and new challenges. With changes in the economic and geopolitical landscape causing strain for every business, cutting costs and alleviating strain where possible is a priority for most.
Businesses can turn to outsourcing and nearshoring options to navigate these uncertain times. This will allow businesses to not just survive but thrive - while cutting costs, diversifying their talent pool, and increasing productivity. Outsourcing and nearshoring quality IT services with flexibility, reliability, and expertise at a lower cost than a traditional IT department is an appealing way for many businesses wanting to continue to transform digitally while controlling costs. There's no silver bullet for uncertain times ahead but forming strong partnerships that meet business needs on a budget might be the tonic that many need to adapt, grow and weather the storm.
Bartosz Majewski is president of Software Development Association Poland (SoDA): an association of Polish technology companies founded in 2018.