Which sourcing model is apt for my product?

March 15, 2019

Jiju A Nair,VP-BDG @ Cycloides Inc.

A major criteria when choosing a vendor for production is the efficiency with which the product will be delivered. This will be a product owner's one major concern. Breakthrough's in communication has brought the world together. This is one reason why we have various product delivery models working successfully.

There are strong and valid arguments in favor and against offshoring and near shoring. There are a number of variables that determines the total cost of a project. One of the major benefits of offshoring is the cost saving. One of them is the cost of resources which is directly proportional to the cost of the project. Overall controlling the cost of labor helps in lowering the cost of the project. This is a predefined logic and there is nothing new here. But there always has been unseen advantages which has been confined to the shadows in offshoring. The time zone difference is considered by many as a disadvantage in offshoring the projects. Once a good delivery model is set up, off shoring provides the added advantage of time overlap. This model provides the provision for client to see and review the output at the beginning of the work day at onshore and can channelize their efforts in project planning.

Nearshore, we have to admit, the concept has been there for some time but rose to prominence recently. Nearshoring is generally a lesser risky outsourcing model, which offers its own set of advantages. As the name suggests the proximity to the development center is considered one of the major attributes worth mentioning. Near shoring definitely does offer some advantages similar to onshore development like regular communications during the business hours, lesser communication barriers, less travel time etc. When it comes to pricing, near shore may not be able to match up to offshore, but being in the same time zone and ease of travel to the location can be an advantage. But with efficient process and project planning this can be a better option than offshore development, especially if we consider the risk associated with an offshore project delivery getting delayed due to communication barriers and time differences. To some extent, this will offer better control on the process and the project. The location of the development resources depends on the project's requirement. A large project which has had the liberty of time and proper planning and has a reliable offshore vendor can be worked on from anywhere. Offshore will be the cost effective mode of execution. Projects which requires a lot of collaboration between the client and the vendor and time and price is a major factor, then near shore will be a better option than offshoring.

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