Outsourcing is an integral part of the modern globally-integrated economy. Companies across all industries are engaged in outsourcing all types of work to reduce costs and improve efficiency. Some people think that only work which doesn’t require a huge amount of specialization, like call centers or certain kinds of manufacturing, are outsourced to other companies. But the truth is that all kinds of work can be sourced out, even in highly skilled fields like engineering.
There is an increasing demand for skilled, cost-effective engineering support in many different engineering disciplines. When it comes time to make a decision about which company to go with, there are a number of factors that need to be taken into consideration:
- Are there time zone differences, cultural differences, or language barriers that might inhibit productivity?
- What about transparency and intellectual property protection?
- How politically and economically stable is the country I’m looking at?
- Should you go with a firm on the other side of the world that offers the cheapest labor? What about a company just a short flight away that costs a little more, but with minimal time difference? Or should you just play it safe and work with a reputable domestic company?
Feeling frazzled yet? Relax, we’ll help you sort through all this and figure out what’s what.
Offshoring VS Nearshoring VS Onshoring for Engineering Support
When many people hear the word “outsourcing,” they often think of IT support or certain types of manufacturing jobs being relocated overseas. But outsourcing is actually a lot more complex than that, and there are many different ways to go about it, many which don’t involve leaving your home country at all.
Hiring is a challenging and time-consuming process, and it’s becoming more common for engineering directors to turn to staffing agencies to find highly skilled engineering support. Let’s clearly define the differences between these three types of outsourcing before weighing the pros and cons of each.
Offshore. This term is used to describe a company agreeing to outsource certain jobs to a company in a distant country where labor costs are much lower. For example, an American tech company hiring a company based in the Philippines or India to provide IT customer service would be a classic example of offshore support.
Nearshore. This is similar to offshoring but on a smaller scale. Nearshoring is when a company partners with a firm based in a different country located only a short flight away, perhaps three or four hours. This minimizes time zone differences and makes the logistics of in-person meetings easier. If an engineering director in Germany, for instance, was interested in nearshoring, he or she might look for engineering support with a company based in Hungary or Slovakia.
Onshore. The phrase “onshore” is used to describe a company outsourcing certain jobs or projects to another company that is located in the same country. If a computer hardware manufacturer based in Texas hires a call center in Mississippi to handle their customer service, that would be considered onshore support.
Now, if all you’re doing is making T-shirts, you probably don’t need to spend too much time wracking your brain trying to pick the right option here. But if you’re the engineering director of a billion-dollar energy or aerospace company, this is definitely a decision you need to think carefully about. Let’s examine the pros and cons.
Pros and Cons
PROS: Lower labor costs.
CONS: Time zone differences can be an inconvenience, potential language barriers and cultural differences must be taken into account. In some countries, lack of protection for intellectual property (IP) is a concern.
PROS: Labor costs may still be lower, time zone differences are much less of a problem, easier to travel back and forth between locations for in-person meetings.
CONS: You may have fewer options to choose from vs offshore and onshore solutions. There may also still be subtle cultural differences that must be taken into account, like holiday schedules, management styles, efficiency and best practices.
PROS: Zero/minimal language and culture differences facilitate smooth communication and higher productivity. Distance and time are much less of an issue; it’s a lot simpler to set up a conference call or meet in person when there isn’t a 12-hour time difference and thousands of miles between you and your outsourced staff. Depending on the industry, project, and specialization, onshore support may offer the highest quality labor.
CONS: It may cost more than offshoring or nearshoring.
Which is Right for Me?
The answer to this depends on the industry you’re in, and what your priorities are. If lower labor costs were the only thing that mattered, everyone would simply opt for offshoring. But as you know, engineering isn’t that simple, is it?
If you’re reading this blog, it means you’re looking for high-quality technical and engineering support. It also means you know that basing this decision simply on labor costs is a losing game. The skills and quality of the people on your outsourced team, as well as how they are managed, are just as important, and arguably more so.
At Riverside, we understand that bringing the right people onboard at the right price is the key to getting the job right. Since 1990, we've provided exceptional technical staffing solutions to clients in the fields of aerospace, aviation, energy, healthcare and transportation. Let us know what your engineering support needs are, and we’ll link you with the best contract, contract-to-hire and direct hire staff you can find. Regardless of where you are in the world, Riverside is your best choice for skilled technical staff support that will meet the needs of your project and your organization.