It is not the price that matters – it is what we get for it that is important. That is why choosing the seemingly least expensive proposal will frequently entail much greater costs than expected, in terms of time, corrections and the need to look for a new business partner. This is particularly true with IT projects. Companies have learned this truth in recent decades, creating new outsourcing trends: from offshoring to nearshoring.
In practice, however, although nearshoring is economically reasonable, it sometimes turns out to be a less-than-perfect choice from the business perspective due to questionable quality, communication difficulties and misunderstanding of the business procedures and legal regulations of the client’s country. As a result, companies are increasingly cautious when signing IT contracts with foreign companies, adopting the following approach: expensive, trusted local suppliers vs. cheap suppliers from the east whose work requires enhanced supervision (i.e. time and money). Does this mean that less expensive, foreign suppliers are no longer an option if we want to be certain that the objectives of the IT project will be achieved and ensure the comfort of work?
No, because the price will always be an important criterion. How do we minimize the risk of choosing the wrong foreign supplier to ensure maximum working comfort? Companies usually use the most basic criteria: experience, references and knowledge of the market. However, there are several less obvious ways of choosing a proven partner in business to provide services better than that which the odder bidders can offer – this has created a new trend in IT services outsourcing: Premium Nearshoring. Such a supplier offers quality comparable to local IT partners at a more reasonable price (which, however, will certainly not be the lowest price possible).
How to find and recognize a supplier of Premium Nearshoring?
- Narrow down the search to those foreign IT suppliers that compete with local suppliers, i.e.: suppliers that have the industry and domain knowledge, attend fairs and conferences, have similar clients and are recommended by local partners. If they can afford to sell or be present on an unfamiliar market, they will usually know the local economic and social conditions and will be ready to do business in that region. If we are looking for a supplier to implement an international project, we should check its references in the countries the project concerns, make sure that it uses local subcontractors and, if so, check their references too.
- Verify the experience of the supplier to see if it has implemented any complete, comprehensive projects – do not be a guinea pig to experiment on. If the considered supplier has references from similar companies, has already implemented similar projects and is recognized as an international expert in this particular field, it should be regarded as trustworthy. What to do when this is not the case? Start your cooperation with a small project or propose that the supplier participates as a subcontractor of the main contractor / internal IT company implementing the particular project. Example: as one of the less-known brands in the world, we naturally aspired for larger projects, but we had to consider the fact that we would encounter limited confidence. In order to ensure security and comfort of work (our own and the client’s), after implementing several minor projects, we gradually progressed to larger contracts, eventually becoming the main implementation partner, working hand-in-hand with the local IT supplier or even taking over management of the entire project for the client.
- With complex, long-lasting international projects, good communication will be critical to success. That is why the partner should be familiar with the culture of the client and the companies whose project is to be implemented. Partners from Central and Eastern Europe, for instance, are frequently chosen for international projects due to high flexibility and adaptability in terms of working culture and understanding of economic and social conditions both in Western and Eastern Europe. That is why companies from Central Europe can frequently bridge the gap between the western head office and local branches.
- Talk. Premium Nearshoring involves a business partnership, not just a single job. A supplier that asks about the business objective of the project identifies with the project and demonstrates that it is willing to get to know the team and meet in person (instead of only working remotely) and, most importantly, advises and suggests how to solve specific business problems in a proactive and independent manner. Such advice is all the more valuable if the partner has extensive experience in the particular area.
The author of the text is Remigiusz Efinowicz, Managing Partner and Executive Director of International Sales at Hicron
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