Nearshoring is one of the fastest-growing trends in the global economy. As companies look for ways to cut costs without sacrificing quality, moving their offshore talent closer to home has become an increasingly attractive option. However, there are a number of pitfalls that can trip up companies who want to nearshore—and they're different than what you might expect. In this article, we'll outline some common nearshoring pitfalls and how to avoid them:
What you need to be aware of
There are a ton of nearshoring and outstaffing vendors out there, all of them with a similar, yet unique service model and access to a certain talent pool, knowing what to expect before you choose one to work with is crucial. Keep this in mind:
- You should not hire someone too quickly without vetting them and making sure they’re the right fit for your team. Your first impression may not always be accurate, so give yourself time to get to know them before bringing them on-board.
- Vendors in this space are typically competing in cost, speed, and service quality. Understand first what you’re looking for, so you know what to identify in a potential agency or partner.
Without further ado, here are the top three pitfalls to avoid when kicking off your nearshoring project:
1. Not taking the time to know your vendor's capabilities
One of the most important things you can do when working with a vendor is to understand their capabilities and limitations. During those initial sales calls, everybody will try to sell themselves as the best option out there, and why wouldn’t they? As a potential prospect, it’s in their best interest to tell you what you want to hear.
The reality is it’s impossible to excel at everything, in delivering a service or capturing a niche, companies must make sacrifices, a lower cost may be a sign of higher operational risk, fewer benefits, or poor service quality, a cost that is too high might not be worth your effort if no additional value is offered.
Here are some things to keep in mind:
- Do your due diligence: Ask for case studies, look at reviews, history and time in the market, reputation, even employee opinions, these will help you paint a clear picture of the vendor you’re dealing with, what their strengths are, and where you might expect to come across hurdles.
- Dig deeper: Ask difficult questions to figure out how good of a grasp a vendor’s representatives have of their own business capabilities, look for quantifiable data, do they understand their own scalability? Do they know what the market median is?
- Appreciate the ability to say “no”: When something seems too perfect, it probably is. A vendor who tells you exactly what you want to hear with little data to back it up should raise your flags. An honest representative will recognize their strengths and flaws, will negotiate in good faith without blindly agreeing to your requests, and will know their limits instead of bending backwards to convince you that they’ll do anything to fit your needs.
2. Not aligning on expectations
Misalignment on expectations is one of the top reasons that nearshoring relationships fail. During those early stages it can be tempting to breeze past the specifics in order to hire that talent that you’re in dire need of. Some of the common questions that should be addressed prior to starting are:
- What am I paying for? When am I paying it? How am I paying for it?
- How will you support me if I come across issues? What happens if the relationship doesn’t work out?
- Which responsibilities should each party hold?
- How are you protecting my data and my business?
- How will we move forward during x, y, and z scenarios if we face them?
Make sure you leave nothing out and be specific about your own expectations when working with a vendor. Never take the “we’ll cross that bridge when we get there” approach in this situation. In addition, make sure you understand their expectations as well—this will save you (and them) lots of headaches as you start working together.
3. Lack of communication
The nearshoring process is not a one-size-fits-all solution. You must be flexible and willing to communicate your needs with your nearshoring partner. If you don’t have the time and resources to look after your new remote team in the same way you look after your in-house team, then outstaffing may not be the right choice for you.
Nearshore outstaffing through a partner or vendor is typically a three-way effort, the hired individual(s), your vendor, and you. Don’t assume either of the other parties knows the full extent of their responsibilities, scope, or expectations if it hasn’t been expressly mentioned.
Don't trust blindly. Communicate carefully. Protect everyone with a contract.
When you nearshore, it’s easy to relax your guard or be overly trusting of the new partner company you work with. You may want to believe they are honest and good people who will deliver what they say they will deliver—but don't forget that this is an unfamiliar situation for both parties, so take extra caution in making sure all terms are clearly outlined and binding in the contract.
This is equally as important when jumping into your first nearshoring effort, as it is when it’s not your first outstaffing experience. It’s easy for your vendor to assume your expectations are similar to other clients they’ve worked with, and for you to assume their service works just like your previous partner’s. When everything is written on paper, nobody can pretend they didn’t know.
While there is no doubt that nearshoring can be a very successful strategy for reducing costs, it does come with its own set of risks. But don’t worry, these risks and pitfalls can be prevented if you take the time to do your homework and make sure that your vendor meets all of your expectations. Ensure that everyone understands one another's commitments before entering into any type of agreement or contract. And finally, it's critical that everyone communicates clearly with one another throughout each phase of this process so there are no surprises when the work begins!
Looking for a trustworthy nearshoring partner? Oceans Code Experts is the only Triple-A quality outstaffing vendor in Latin America. With a pool of talent of over 250 individuals across 12 countries, we can reach the talent you need and guarantee your success in the world of outsourcing.
