Choosing a nearshoring partner is in many ways not different from choosing a good outsourcing vendor. I have been in the business 15 years, and venture some general recommendations to choosing an outsourcing partner:
- Pick a professional firm with a known trajectory and experience in the trade you are looking for. To narrow your choices, pick a firm that has been around for enough time: the fact that it has survived, or better still thrived, is usually an indication that they must be doing something right.
- Don't choose your vendor via an RFP (Request for Proposal) process. RFPs are "just paper": they are easy to manipulate and will tell you little about the people you will be dealing with on the other end of the line. You can use an RFI (Request for Information) as an initial tool to wither down your candidates, but do speak —at the very least over a video-conference—with those final candidates you are thinking to select. (In fact, if you are seeking a long-term relationship that involves a sizable investment, think about getting on a plane and visiting your vendor personally. Nothing beats getting to know your partner face-to-face, as well as seeing the facilities and environment in which they operate. Now, if the vendor is located on a place you would not personally dare visiting, or that is logistically complex to visit, simply eliminate that vendor!)
- Speak with at least three vendor client references. The nearshoring partner will probably provide references that they think will shine a positive light on them, of course, but third parties will naturally be more transparent. Don't trust any reference that does not have anything negative to say about the vendor —nobody's perfect!
- Ask the vendor to walk you through a project they have performed that demonstrates their abilities. Go deep and ask technical questions (this is specially relevant for software development engagements). People can speak wonders about their technical prowess, but real projects are hard to fake.
- If your project is key to your business, don't go for price alone when selecting a vendor (in the same manner price is but one variable to choose a doctor that will perform a delicate operation). If your project involves software, choose a vendor that is technically capable and has an organization that can respond in case they make a mistake (proper insurance, enough resources, enough bandwidth to grow the team, etc).
In choosing between an outsourcing partner (a company outside your own that will help you perform some task), an offshoring partner (a company in a far away country, usually in a different time-zone, that you are considering hiring to get a better bang-for-your-buck), or a nearshoring partner (a company in a different country that usually overlaps with your same time-zone), keep in mind the following:
- From a US perspective, nearshoring usually involves Canada or Latin America. Canada is easy to communicate with in English, but is more expensive. Latin America can provide better rates, but make sure you qualify the bilingual fluency of your vendor before you commit.
- The absolute lowest offshore outsourcing prices can typically be found in Asia. However, if the task you are outsourcing requires real-time interaction with your vendor team, paying slightly higher rates for partners in your same time-zone is usually a good investment (it is a must, for example, if you want to develop software with a partner using agile methodologies such as SCRUM).
- Take you own team's considerations into account when deciding for a vendor. Nearshore vendors will make life easier for your team, as they won't demand that your team wake up early or stay awake late to attend meetings. If you are dealing with a software engineering project, this is of special importance because engineers are in high demand, and will take job offers elsewhere if your new outsourcing relationship wreaks havoc in their own work-life balance.
To close, do consider carefully what you wish to outsource (or offshore, or nearshore). Outsourcing requires management overhead, and can be a pain when not thought-through properly, or when not enough time is spent managing the relationship.
For more on what to consider before you decide to outsource, you can read