Nearshoring, on-shoring, and off-shoring are branches of a much broader term referred to as outsourcing. Outsourcing is the practice of assigning a part of your business operations to a third-party company as it will complete the tasks more efficiently and at a lower cost.
Outsourcing is usually done by companies when they do not have the expertise to deal with a specific project. By this, they can avoid hiring and training new personnel but leave the job to vendors who already have the expertise.
Off-shoring is a kind of outsourcing where work is assigned to third-party companies in foreign countries, usually with time zone and cultural differences. Because of such limitations, a better outsourcing model is nearshoring.
Nearshore outsourcing is an arrangement wherein one can outsource tasks like software development to third-party teams in neighbouring countries. Thus, a tech company in the US will opt to outsource its projects or tasks to a nearshore company in Canada. It is identical to offshoring but with the difference that the third-party company is located nearby.
US companies are relying more and more on nearshoring tech tasks like software development to exploit their ability to reduce costs improve the limitations of time zones and build superior skills.
Canada is currently a hot spot for technology. It is the birthplace of Java, the leading computer language, and it has been at the forefront of AI (Artificial Intelligence) technology in the past few years.
US tech companies face many challenges even as they experience rapid changes and the hurry to keep up with such changes. In this regard, outsourcing, especially nearshoring to Canada, is emerging as a hot trend.
Outsourcing work to countries like India generated their own set of problems. Internet connectivity, cultural differences, time zone limitations, and language barriers are major problems.
Even as US companies are scouting for outsourcing talent, Canada is emerging as the top target place for nearshoring arrangements. Expenditure on IT is climbing to an annual $3.8 trillion, and so companies are faced with the challenge of finding tech talent while cutting costs.
Looking towards Canada
There are many reasons why US companies, especially tech majors, are looking toward Canada for their outsourcing (nearshoring) needs. Canada started out as a small destination for outsourcing but has evolved as the must-be location when American companies are searching for nearshoring.
Businesses that desire to enjoy competitive benefits will find nearshoring in Canada as a perfect solution for their needs. Besides being a faster solution, nearshore outsourcing in Canada is ideal for software development.
Nearshoring work to Canada has the following benefits:
- Collaboration across borders
Since they are located in adjacent parts of the world, the US and Canada share similar time zones. This makes it easier for businesses to tie up with each other and organize video conferences in real-time across the borders. Any issues collaborating and connecting on several IDEs (Integrated Development Environments) during work hours may be solved by arranging a software developer to work with both of you simultaneously. The cycle of developing software also becomes more predictable with nearshore outsourcing in Canada.
Since cities in US and Canada enjoy a close proximity, executives can fly to each location in an easy manner within a few hours. If required, you can fly back to your own office within the same day after visiting your nearshoring team.
- Access to global personnel
Labour from foreign countries like India and China has been instrumental in the progress of the tech sector in Canada, and the government actively encourages the migration of such labour to the country. Because of the tightening of visa rules for foreign labour in the US, there is a shortage of the same in the country. So, American tech companies are busy using tech talent across the border in Canada. Canada has a big pool for such talent, and so nearshoring tech work to the country is a win-win solution for all.
Additionally, the facility to enable face-to-face meetings with personnel across the border boosts the demand for nearshoring. Projects will be finished seamlessly with consistent schedules of meetings. Therefore, nearshoring IT development work to Canada is a superior and reliable option since its workforce is highly experienced, skilled, and qualified.
- Cost-effective solutions
Outsourcing has the benefit of cutting costs as a reliable business model. Though this factor is not the primary motivation for nearshoring, it is still significant. The main reason is the favourable rate of exchange for US companies. The latter will not incur much cost when they outsource IT work to Canadian companies. Besides the low rate of exchange, US companies can enjoy low costs of software development in Canada.
The US dollar is much stronger than the Canadian dollar, and as a result, it is profitable to spend more in Canada. If the political scenario is stable, projects will be delivered on time and within budget. Projects in the long term are subject to less political risk.
- Access to quality talent
Educational institutions in Canada and the rest of the world are churning out more and more computer professionals. Many of the IT professionals of the world like to live a quiet lifestyle in Canada. Hence US companies can be assured that your Northern neighbour will be the top priority when you outsource work to them.
You can outsource any kind of IT work to Canadians, whether it be for web development, full-stack development, front-end development, or back-end development.
The proximity of the US to Canada also enables travelling between the two countries as well as within these countries, which is highly affordable. This way, you can easily handle complicated and big projects that might need only your occasional presence while the development takes place.
- Multi-cultural approach
As a country, Canada is diverse and multi-cultural. Call centres in the country offer services in multiple languages. So, if you need multi-lingual support, turn first to Canada. Differences like accent do not count for American clients. One can clearly communicate in English with call centre executives in Canada as Canadians act and speak the same way as Americans. Business success depends on smooth communication between contracted engineers and your team of product development. Nearshoring enables this much better than offshoring.
In sum, you can enjoy many potential benefits by nearshoring many elements of your IT functions to Canada. A nearshore company in Canada is a highly useful partner for a US business with regard to outsourcing its IT work.