Many companies are finding that technical complexity grows faster than their internal teams can keep up with.
System modernisation, new cybersecurity requirements, larger data volumes and the integration of AI all raise the bar for what organisations must be able to deliver.
While the digital ambitions continue to increase, funding does not grow at the same pace. Leaders are being asked to deliver more for less, or at least the same.
Recruitment remains a significant challenge for many companies. There is a specific shortage of specialists in development, cloud, and security. This leaves internal teams under constant strain, slows down important projects and creates bottlenecks.
So organisations face a growing mismatch between rising technical complexity, ambitions and stagnant resources, leaving internal teams under pressure and critical initiatives behind schedule. This creates a clear dilemma that demands new ways of working, new delivery models and smarter approaches to meeting digital ambitions.
In this situation, outsourcing becomes a relevant option to consider. It helps organisations handle growing workloads, maintain progress and reduce costs when internal capacity and budgets are limited.In this article, we explore outsourcing, the difference between nearshoring and offshoring, and when nearshoring is the right choice for your organisation.
What is outsourcing and why do companies outsource?
Outsourcing allows organisations to access skills and capacity beyond their own teams – especially when specialised expertise or cost efficiency is needed.
Companies typically outsource for three reasons: cost, competencies and capacity.
While cost remains an important factor, outsourcing today is increasingly driven by the need for skills that are difficult to recruit locally. Many organisations work with technologies and architectures that require niche expertise, which can be hard to attract and retain.
At the same time, many companies lack raw capacity – enough hands and hours – to keep projects moving at the speed required. Outsourcing therefore becomes a way to secure continuity, tempo and quality in large or complex initiatives.
Outsourcing has offered access to large talent pools and lower costs, but also challenges related to communication, differences in work practices and the need for heavy coordination. These experiences have created some degree of scepticism towards outsourcing as a model.
However, this skepticism often comes from experiences with a specific delivery model rather than outsourcing itself. The outcome depends heavily on whether the chosen model aligns with the project’s needs.
Within outsourcing, two main models dominate: offshoring and nearshoring. Both extend a company’s capabilities, but they work very differently in practice.
What is offshoring?
Offshoring is a traditional outsourcing model where work is moved to distant countries to benefit from lower labour costs and access to very large talent pools.
Where offshoring works well:
Offshoring is suited for delivery setups where processes are stable, output can be clearly specified, and collaboration does not depend on continuous interaction with internal teams.
Typical advantages of offshoring:
- Access to very large global talent pools
- Attractive pricing
- Strong fit for well-scoped, standardised work
Typical challenges of offshoring:
- Slower communication due to large time-zone gaps
- Differences in work practices and expectations
- Higher coordination requirements
- Hidden costs that appear during execution
What is nearshoring?
Nearshore is an outsourcing model where companies collaborate with teams in nearby countries to access skills that may be difficult to recruit locally. It is characterised by geographical proximity, overlapping time zones and a cultural alignment closer to the company’s own working style, making daily cooperation smoother.
Where nearshoring works well:
Nearshore is suited for projects that rely on continuous alignment and close integration with internal teams, especially when quality and speed are central.
Typical advantages of nearshoring:
- Faster clarification and shorter communication loops
- Stable delivery flow with fewer handover issues
- Shared working practices, methods and expectations
- Easier compliance through common European regulations (e.g. GDPR, labour standards)
- External specialists can be integrated more seamlessly into existing teams and processes
Typical challenges of nearshoring:
- Smaller talent pool than global offshoring
- Costs may be higher than offshore locations
Comparison of the two models:
The key takeaway: The difference is not just about price. It is about how easily the work can be managed. Offshoring relies on distance and formal processes; nearshore enables closer collaboration and faster alignment, making delivery more stable in practice.
Scenarios where nearshore may be the right solution
Offshoring has historically attracted very large enterprise organisations that have been able to succeed through substantial investments and extensive delivery setups.
However, many companies choose nearshoring because it offers a more controlled and integrated starting point on their outsourcing journey. Nearshore is a better match for organisations that want to begin with smaller teams and lower complexity. The geographical and cultural proximity enables closer collaboration that is easier to integrate into day-to-day processes.
You should consider nearshore in the following scenarios:
- When you need to deliver more with fewer resources: Budgets are under pressure while digital ambitions rise. Nearshore provides access to qualified resources without the cost level associated with local hiring.
- When you need flexible scaling: You can add or reduce capabilities as needs change – without long onboarding processes or organisational overhead.
- When you want to focus on a strategic workstream: A nearshore team can drive a dedicated area, such as cloud migration, data platforms or application modernisation, while internal teams focus on core operations.
- When your solutions require specialisation: If you need skills that are difficult to recruit locally, nearshore gives you access to experienced specialists with proven expertise.
- When capacity shortages create bottlenecks: Nearshore adds stable capacity that keeps projects moving at a consistent pace.
- When you are running larger transformation or development programmes: Projects with high complexity and many dependencies require close coordination, quality and continuity – and here nearshore is often easier to manage than traditional offshoring.
Choosing nearshore is a strategic decision. It is not just about filling gaps, but about building a delivery model that can evolve with your organisation. When the right setup is in place, nearshore becomes more than extra hands — it becomes a long-term capability that strengthens how you execute, scale and innovate.
Nearshore as a Future Investment
Nearshore is increasingly becoming a way for organisations to strengthen their delivery model with a setup that is easy to manage and adaptable to changing business and technology needs.
For many leaders, it’s essential to secure the right skills, keep momentum and control costs without adding extra complexity.
Devoteam has many years of proven experience delivering nearshore services across Europe, supported by strong delivery hubs in Portugal, Morocco and the Czech Republic. Through this long track record, we’ve developed a set of flexible nearshore models that match the customer’s maturity level — whether you are just starting with distributed delivery or already have an advanced sourcing setup.
Our approach ensures that nearshore becomes a true value add, not just a cost lever. We align with your governance, ways of working and technology stack, and can scale from small expert teams to fully managed delivery centres. With cultural proximity, overlapping time zones and easy collaboration, Devoteam ensures a smooth, high-quality nearshore experience that accelerates delivery and strengthens your IT organisation.
If you are considering whether nearshore could be relevant for your organisation, or would like to learn more, we would be happy to discuss your needs.
Do you have questions, or would you like to speak with an expert?
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