Nearshoring and Offshoring: the ideal services for IT companies

Find the differences between nearshoring and offshoring and understand which one is right for your business

Sometimes, companies' businesses or projects are very costly and impractical in the country of origin. With this unresolved issue, IT consultants aim the goal of launching nearshoring and offshoring services to companies with high turnover. If you do not know what these two terms mean, understand what we are talking about.

Nearshoring services have the particularity of being hired through a country within the same continent as the IT consultant. As a rule, this type of service is less risky and more labour-friendly; also the production costs of companies looking for these services are lower than supposed internal hiring, allowing a measured and risk-free investment in the services of your business.

This trend has generated greater contours in Portugal after the implementation of the Web Summit, the global event organized in Lisbon since 2016, with a huge influence on technology services and products.

Offshoring does not change much in relation to nearshoring services. The main difference is in the distance between the customer company and the IT services carrier. In this case, these companies are located on different continents (eg, clients in North America and IT consultants in Asia). Low production costs are usually even more visible than nearshoring.

In addition to these two very important services, given the physical distance between the mother company and the company that builds all the support (MD3 outsourcing services, for example), there is also the possibility of having an onshore service that is basically characterized by a partnership between the client and an IT consultant, located within the same country.

As its main advantage, Onshore has the ease of communication (same country same language) and as a disadvantage, the probable lack of human resources to attend to all projects identified by the client.

What do outsourcing service experts say?

Outsourcing services, also managed by MD3, have gained greater regularity at the beginning of this century.

Great economists argue in their thesis, for what is now called outsourcing, that companies should focus on core business activities, where they are specialists, in order to outsource non-specialist functions, obtaining efficient gains. As such, an outsourcing provider will also be able to increase the expertise of its services and human assets.

Outsourcing services, whether nearshoring or offshoring, are at an important level for both sides, be it the IT provider or the project owner client.

Is Portugal a good country for nearshoring and offshoring services?

Since the Web Summit, our country has been increasingly targeted by big investors, innovation and technology professionals that realize what Portugal can bring to the table in the development of new projects.

Both national and international media have increased the strong visibility that Portugal, and its capital Lisbon, have been investing on over the last few years. Foreigners are beginning to see the country as a prime destination for nearshoring and offshoring services: attractive communications infrastructure conditions; skilled, creative and flexible human resources; and shared service accommodation platforms.

According to Gartner, Portugal has the potential to attract major global investors; placing it in the top leading positions as an offshore IT services provider. While, also, recognizing its potential as a nearshoring destination.