Could nearshore IT services be the best alternative to internal IT?

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I think every business would agree that if money grew on trees and if they had a money tree they would always chose in-house IT over outsourced.

Having IT resources that know your business and are available on-tap is a good place to be. But, ironically, could IT suppliers based in regions such as central Europe be the closest alternative to an in-house team for UK businesses looking to cut costs?

I had an interesting conversation with an IT head about nearshore services with a senior IT worker at a finance firm.

When the company's 30 internal application developers are stretched at the busiest time of the year the company has to bring in the skills.

Traditionally the company had hired contractors for short periods to fill the gaps. This was its preferred method over the cheaper offshore alternatives. The reason offshore was not attractive is the large resource required to manage offshore development.

But this has its limits. The IT contact of mine said contractors are expensive and transferring all the knowledge to them is a lot of effort for a short time. The contractors can move to pastures new when they like almost and take the knowledge with them.

Suppliers also can, but if you can develop good strong relationships with them over years it can give you the skills you need on tap but you don't have to pay for them all the time.
Now add to that the lower cost and close proximity of nearshore locations and you have potentially the nearest thing to an in-house team as you can get. Lower cost services combined with easy to manage teams that understand your business.

But suppliers have multiple customers and I suppose the dedication you get depends on how important you are to the supplier.

What do you think?



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Your article is interesting, perhaps consideration should even go as far as onshoring. The current unemployment levels between 16 - 25 year olds presents the UK with a great opportunity to provide services that you describe in the same time zone with minimal management overheads and better quality. Business Technology Companies like Certeco are now investing heavily into Academy services using junior analysts to provide services that compete with offshore and nearshore companies and offer a great alternative model. Something very different from contractors and a model that can have a positive impact on improving youth unemployment.

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This page contains a single entry by Karl Flinders published on November 2, 2012 3:16 PM.

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