Outsourcing arose as a lucky star on the big corporations’ sky, responding to their hunger for gaining more market share. They moved quickly, in order to grab the chance to fulfill their needs of cutting back on costs, improving quality, reducing the risk management and a solution towards easy scalability.
IT companies have packed the luggage for their testing, data base management, ERP management and application development functions and bought them a ticket for India, Bangladesh or Indonesia. They called it offshoring.
In the late ’90 and early ’00, shareholders were rubbing their hands, grinning at the figures that were growing faster and faster. A large gap existed between the wages in the industrialized nations seeking to outsource and the developing nations providing the services which made the whole offshoring thing sound like pure gold. Assigning relatively little resources, strategic planners have noticed the potential to reap generous dividends.
As time was passing by, the offshore fairytale has started to show its side-effects as well. The physical distance, namely the lack of geographic proximity and the different time zones, the quality issues, the language and cultural barriers, the restrictive governmental policies and the security issues, made CEOs wonder if it was indeed the best way to go. And then the global economic came and topped it up.
At this point, the people in charge with the companies’ strategy scratch their heads and came up with the idea of moving the offshored features to their neighbours. If we are talking about USA, then the attention was kept by Brazil, Chile, Canada and Mexico, and when it comes to the European corporations, then, we will, of course, refer to the Eastern Europe. These little gems present themselves as being 1-2-3 hours away with a maximum of 2 hour time difference, with similar cultural background, part of the same global organisations (NATO, European Union etc) which translated in an increased flexibility for organizational alignment. Therefore, nearshoring became an effective means of ROI increase.
Let’s take as an example a nearshore.Net development company in Romania. It’s capital, Bucharest is the 6th most populated city of the European Union, with a city-limit population just behind that of Paris. The talent pool is supplied by the Polytechnic University (UPB), one of the largest technical schools in Eastern Europe, with 6,000 new technical graduates each year. The city boasts one of the highest percentages of English speakers among its population under 40 years of age: 75% of them speak English either as a foreign or as a second language.
And yet, the winner has not been named. Who will eventually win the battle? The nearshore or offshore companies?