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For companies throughout the world, 2020 was a year that brought digital innovation out of necessity. Executing quickly and effectively against a digital strategy was critical for businesses to survive across all industries, even those that had previously been hesitant to fully embrace digital innovation. In 2021, forward-thinking organizations are continuing to build on the digital momentum from 2020 and accelerate their digital initiatives to outpace their competition with an optimized global delivery strategy.
An optimized global delivery model that is tailored to your organization can accelerate your digital projects in the most cost-effective way possible without sacrificing quality. This often requires balancing a blend between offshore, nearshore, and onshore teams, adapting to the needs of the project as they evolve throughout its lifecycle.
What is Global Delivery?
Now, more than ever, the digital world is global. Global delivery generally refers to software development in which the work is conducted by teams located in different parts of the world. From a U.S.-based perspective, these delivery models are typically categorized as follows:
- Offshore: significantly geographically dispersed teams in different time zones than the U.S. Examples include India and China.
- Nearshore: Teams in nearby geographic locations and/or within a U.S. time zone. Examples include Colombia, Mexico, and Costa Rica.
- Onshore: Teams within the U.S., often working within centralized delivery centers.
Which Global Delivery Model is Right for You?
The simple answer is: all of the above. Each global delivery model comes with unique challenges and benefits, which we will further explore in this article. A strategic, multi-shore approach to custom software development maximizes cost savings, accelerates deployment timelines, and delivers high quality results.
Striking the right balance with a multi-shore team is essential to the success of the project. Choosing the optimal location for each role depends on the nature of the specific project as well as where that project is within its lifecycle. Let’s take a closer look at the offshore, nearshore, and onshore delivery models.
Offshore Delivery
Offshore software development is often associated with affordability. India, China, and Eastern European countries are popular locations for U.S.-based companies due to some of the lowest price points available. It is often incorrectly assumed that lower price points translate to poor quality deliverables. There are many offshore firms that have neglected to invest in their teams and have failed to modernize their methodologies, both of which fuel these negative perceptions of outsourcing. However, there are also many reputable companies capable of delivering high quality software development, testing, and ongoing support services.
Another benefit of offshore delivery is the availability of talented developers and engineers. The talent pool in offshore locations has been developing over the past decade, resulting in a high volume of skilled professionals. Deep offshore talent pools also enable teams to quickly scale to meet the needs of each specific project.
There are two main challenges to consider when working with offshore teams: time zone differences and industry regulations. When teams are separated by multiple time zones, real-time communication during business operating hours is more challenging. Certain projects, within government or financial services for example, may be explicitly regulated to the United States. In these instances, offshore outsourcing may not be a viable option.
Nearshore Delivery
The primary benefit of nearshore delivery is time zone compatibility. Time zone alignment enables true agility and real-time communication for internal and third-party development teams. Companies in nearshore countries, such as Mexico and Colombia, operate during the same hours as their North American clients, allowing for real-time communication during normal business hours.
Nearshore outsourcing is also associated with an attractive price point. While the cost savings are not as significant as they are with offshore delivery, lower operating costs within Latin America are still one of the primary reasons that organizations in North America decide to partner with nearshore software development companies. Average wages in nearshore countries are traditionally lower due to more affordable costs of living and weaker currencies compared to the USD.
Latin America has been cultivating and educating tech industry professionals for decades, providing a deep pool of available talent. A further advantage is that the skilled professionals within Latin American countries have strong English language skills and an alignment to U.S. culture, enabling seamless communication and fewer instances of cultural misunderstandings.
The biggest challenge companies will face with nearshore software development is compliance with industry regulations. As with offshore outsourcing, certain industries are subject to government regulation which may require specific projects to be entirely-U.S. based.
Onshore Delivery
Domestic, or onshore, delivery is a great option for U.S.-based companies that are hesitant to start with offshore delivery right away or are prevented from doing so by industry regulations. Working with teams in your home country eliminates the risk of cultural misunderstandings and communication issues due to a language barrier.
The greatest advantage of onshore software development is the capability for on-site collaboration. There are many instances in which face-to-face team meetings would be beneficial. This is much easier when your extended project team is domestic, and eliminates the many challenges involved with international travel.
While onshore software development is convenient, it is the most expensive of the three options. Domestic development partners are able to charge exponentially higher rates than their offshore or nearshore counterparts. Centralized onshore delivery centers can help to lower these costs, but will not offer as significant cost savings as offshore or nearshore delivery centers.
Another challenge with domestic delivery in the United States is the occasional shortage of talent. U.S.-based developers and engineers are some of the best in the world, but recruiting and retaining these employees can be difficult given the competitive nature of the tech industry. Domestic talent shortages and increasing costs associated with retaining talented employees lead to overall cost increases for domestic software development projects.
Striking the Right Balance
An optimized global delivery strategy incorporates a balance of all three delivery models to enable agility. Organizing a multi-shore digital project team requires a strategy that takes each role on the team into account. You want to ensure that you are staffing people with the right skills in the right place at the right time.
As a leading global digital consultancy, Perficient takes an “all-of-the-above” approach to global delivery, seamlessly combining offshore, nearshore, and onshore teams to deliver powerful results for our clients. Our agile methodology and digital strategy have been proven and refined through hundreds of projects with leading brands across a wide variety of industries.
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