Nonillion

Suppose that daddy lives in New York and mammy in Rome, while their children are settled down in New Delhi. It would be fairly ridiculous to think that they could enjoy a normal family life with the help of smart phones, webcams and chat software.

Technology enabled Offshoring,  this has led to the assumption that essential processes such as communication, coordination, and collaboration can be easily managed over distance and that physical location becomes a non-issue.

Offshoring or Nearshoring?

“Offshoring describes the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting”.

“Nearshoring is “the transfer of business or IT processes to companies in a nearby country, often sharing a border with your own country”, where both parties expect to benefit from one or more of the following dimensions of proximity: geographic, temporal (time zone), cultural, linguistic, economic, political, or historical linkages. The service work that is being sourced may be a business process or software development.”

These are only two definitions by Wikipedia on what Offshoring and Nearshoring might mean.  Some say the difference between both is the presence of an ocean. Others say that Nearshoring is within 5 hours of flying time and some others claim that Nearshoring is about outsourcing in the same time zone, while Offshoring happens when the business process is transferred beyond it.

Nevertheless, all these statements have something in common: What differentiates Nearshoring from Offshoring is proximity.

Because of this proximity and thus distance, location is still very important despite current globalization trends.  But proximity is more than distance!

Geographical Proximity

Proximity makes it easier to reach distributed teams. Very short travel distances make it simple to have face-to-face meetings without too much overhead.  Within Europe you have low cost carriers who bring you (very often less than 100 euro for a return flight) all over Europe.   And because of the limited time-zone gap, no Jet lag!

A small, or even no time-zone difference makes it possible for the outsourcing partner to work at the same hours as the client or the time gap is so small that it doesn’t interfere with the regular business.

Cultural proximity

Proximity is not only about distance. It is also about having a common set of values and habits. Proximity is also about having similar way of living and of doing business. A comparable set of (EU) legislation and rules.  Cultural nearness makes mutual understanding easier while understanding each other often start by using the same language. English is very often the Lingua Franka for the business.  Sharing the same cultural importance of adapting English or even the importance of learning foreign languages is of key importance.  A good knowledge of what is defined as the common language brings the succes factor without any doubt up.

But language is not the only element which is important for successful outsourcing. Sharing a common history which has led to a more or less common way of thinking and acting is important too. In Europe a lot of countries share a common history.  Very often these countries were sharing the same religion for centuries.  And of course, the French revolution as basis for numerous legislations (and thinking) in European countries is not to underestimate as determinating factor.

The effect of having distributed teams in a nearshore environment brings down the risk of having multiple teams instead of one team on different locations.  A lot of outsourcing contracts fail on communication and cultural differences.  By choosing a nearshore outsourcing partner this risk of failure is being brought down considerably.

Author: Rudi Van den Bossche, CEO of Nonillion