Nearshoring service delivery models are becoming popular, with small and mid-sized IT companies constantly looking out for IT jobs in the US and Europe. H1 B visas are now getting tougher to get. US regulatory requirements for India-based professional services companies are becoming stricter. Local hires in the US are either too expensive, require a lot of retraining, or are insufficient to service the US demand.

Nearshoring is a business model in which a company outsources certain functions or operations to a nearby country rather than to a distant location such as Asia or South America. In the IT sector, nearshoring is often used to take advantage of lower labor costs and a more favorable time zone while maintaining proximity to the company’s home market. Several different nearshoring models can be used in the IT sector, including:

  1. Offshore development center (ODC): This model involves setting up a dedicated development center in the nearshore location, staffed by a team of local employees who work on projects for the company’s home market. ODCs have been set up by IT companies in East Europe, Latin America, and even Mexico to service the needs of Europe and the USA.
  2. Virtual team model: This model involves working with a remote team of IT professionals from the nearshore location, managed remotely by the company’s home office.
  3. Project-based outsourcing: This model involves outsourcing specific projects or tasks to a nearshore vendor rather than establishing a dedicated team or center.
  4. Hybrid model: This model combines elements of the other models, with some work being done in-house, some work being done remotely by a virtual team, and some work being outsourced to a nearshore vendor.
  5. Captive center: A company establishes its subsidiary in a nearshore location, responsible for a specific function, such as software development, testing, or customer support.

Each of these models has its advantages and disadvantages, depending on the specific needs and goals of the company. By choosing the right nearshoring model and carefully managing the relationship with the nearshore partner, companies can take advantage of the benefits of nearshoring, such as lower costs, improved efficiency, and greater flexibility.

Almost all global IT outsourcing companies use these models to service customers at the lowest price possible. Recently, Wipro announced that it has set up near-shoring centers in multiple small countries bordering US and Europe. These models are becoming popular to leverage the resource bases present in these locations.

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Sudhirahluwalia, Inc