Nearshoring

It seems that outsourcing to geographically and culturally remote countries (Offshoring) is quite rapidly losing its appeal for companies from Western Europe. There are several reasons for giving up this trend and shifting business operations to Eastern Europe. Depending on the business, those are time-zone differences, cultural and economic habits, transportation costs, team coordination and others that outweigh savings. Why NEOS as Nearshoring IT partner is the right answer for those issues?

Why “Nearshoring” is a better idea than “Offshoring”?

In the last two decades we’ve become familiar with a concept of an offshore outsourcing that involves contracting IT/developer experts from Asia, namely India, China and other rising countries in Far East. According to recent studies, that trend is rapidly being replaced with new one – Nearshoring or „the transfer of business or IT processes to companies in a nearby country… to capitalize on benefits of proximity, which includes time zones, cultural and linguistic similarities, and political factors.“

Advantages of Nearshoring are abundant; but except from lower travel and inventory costs, better cultural understanding and time-zone advantages, there are also other, very IT-specific reasons for this business shift.

One of the main reasons companies turn toward Nearshoring is the cost rising in Asia. There were times when Asian wages were much more affordable than the domestic, which was reason enough to cope with prolonged duration of projects and often lower-quality results. Wages in Far East are now climbing for up to 20% a year and there is a constant demand for better work conditions and stricter labor laws. At the same time, almost all Eastern European countries have got flexible labor laws and different government incentives that make them desirable IT destinations.

Another really big issue is the time-zone incompatibility. It’s hard to schedule a simple conference call with an offshore team if they are many time zones away. Coordination of teams in such international projects is significantly harder in Offshoring business setup. On the other hand, Western and Eastern Europe are in the same time zone (+/-1) and that fact allows for business hours conversations over the phone. European countries are reachable in same day for personal meetings, if necessary.

When talking about political climate, rising instability in Middle East, Far East political situations and other factors account for the feeling of being unwelcome in the business sense. Croatia is an example of the country with stable governmental policies and a fair relationship with foreign corporations.

Eastern European countries have low employee turnover rate. While that rate in India sometimes reaches 55% (2010), family oriented Croatian workers don’t relocate often and tend to stay in their companies for years. Mutual understanding is guaranteed, as Croatia has strong European cultural background. All Croatian IT workers are fluent in English, and mostly speak second foreign language – German, Italian, and other West European languages.

It seems logical then to shift from far-away Asian countries and locate business “near” home. Nearshoring means operational efficiency and considerable cost-savings. IT and software development industries are leaders in this newest trend. It’s only a matter of time when others will follow, as besides economic effects, it has multiple other stabilizing effects, like rising European political coherence.

Why NEOS is best “Nearshoring” partner…

But there are other significant reasons to outsource NEOS. Generally, IT experts in Croatia are skilled and educated individuals who attended high-quality Croatian or European colleges and are familiar with business needs of the market. This decreases communication difficulties and misunderstandings. NEOS employs highly skilled experts with formal certificates and (even more important) broad experience on local, regional and European projects for mostly large customers. We have successfully carried out complex projects for various customers in telecom, financial (banking, insurance, investment and pension funds etc.) and other industries. Between them are two largest banks in Croatia, largest Turkish bank (one of Fortune 100), Croatian and Macedonian Telekom (Deutsche Telekom group), and other major international companies. Our experts are proficient in the languages of their clients and have a better cultural understanding of work and related concepts.

Our consultants have deep business understanding. They are experts in Business Intelligence, Data Warehousing, Profitability, Planning, Data Quality, Master Data Management and other related fields, as well as Application Development solutions ranging from Enterprise Java applications to social and mobile custom solutions according to specific customer needs. We are proficient in converting Big Data to business information. We have never had an unsuccessful project or unsatisfied customer.

Our clients are successful. Why wouldn’t you be one of them?