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Web Design Outsourcing: Why It Doesn't Work (And How To Fix It)

May 18, 2008
Tried Outsourcing and found it impossible? Nearshoring might be the solution.

By now, we all know the potential benefits of outsourcing with the potential for saving time and money being at the top of the list (eg People in India will work for less than in many Western countries). But if you have tried it you may have noticed some problems with this work situation. If you have read my last blog on outsourcing problems, you know several of the problems already.

Nearshoring is a derivative of outsourcing, the main difference being that services are sent to a lower-wage country that is in relative close proximity (either by zone or distance and sometimes it's both). Firms that use this strategy are hoping to capitalize on the on the lower costs of the nearby country without suffering some of the challenges of outsourcing to farther countries.

Examples could include a firm in the United States sending work to Argentina or a Japanese company having services done in China.

What are some of the other advantages of nearshoring?

Often times there are certain cultural beliefs that both countries hold close. This can include similar holidays, work schedules or mindset. Countries that are vastly different in cultural beliefs (like the United States and India for example) face major obstacles in terms of communication right from the beginning.

Time zone similarities also provide advantages over outsourcing. At first with outsourcing we believed that we could just deliver the project scope to the folks in India and the next morning, we'd wake up and presto it would be delivered in our inbox. While that was great in theory the reality was less than stellar (missed deadlines, incomplete work, etc). The benefit of being in the same time zone ultimately mean that through phone communication, chat or email we can keep on the same page in real time with our foreign nearshoring partners. Travel is also easier when a project requires frequent flights from the project site and our home base.

Economic benefits can also abound when nearshoring to some countries. The US dollars unfortunate slide over the past few years mean that companies in places like India are forced to raise their prices. While that problem is true with several nearshoring countries as well (for example Brazil and Mexico), there are other countries that have maintained the same exchange rate with the US dollar despite the decline. Most notably, Argentina has traded at the same rate vs. the US dollar for the last several years.

After outsourcing to India and other Asian countries (with little luck) over the past 18 months. Our US company has been able to develop several successful projects by nearshoring to Buenos Aires. In addition to advantages of having a partner in the same time zone, the excellent work ethic, education and competitive landscape in Argentina have really paid off.

Our web design services have been completely nearshored to a firm there called Skinzee Designs. Because many of their employees have done stints in ad firms in the US, Singapore and Europe, we could the same quality of work we used to find in our US ad agency. But at 50-70% less in fees. There are other firms we employ for software modules and as we review more of their work, I will report back with the findings and recommendations.
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