If you’re never heard the term “nearshoring,” it’s the process of getting work done in neighboring countries instead of your own. Usually this refers to software development.
A big problem in DACH is a tech skills gap. By some estimates, DACH is about negative-1 million on the tech/IT roles it needs to be successful across multiple businesses. In that article linked right there, Berlin is even noted as an “international hothouse for digital” with this big BUT: “There aren’t anywhere near enough people with the right skills to fuel it all.”
How’s this all different than 5-10 years ago? And what does that mean for a nearshoring business now?
5-10 years ago
It was much more about creating demand. A good salesman could just toss that line into a meeting: “Have you considered nearshoring your software development? Would you like to hear from me how nearshoring works?” It was probably going to work.
Right now, though….
Companies are more aware of their options (team extension, build-operate-transfer, project outsourcing, …). They understand the region a bit better and the global implications of a platform-driven economy, i.e. even considering hiring developers in Manila.
For nearshore providers, then, it’s much less about providing the demand and much more about fulfilling the demand. Fulfillment means two things:
- It starts with sales and marketing messaging and not your engineers.
- But the engineers you provide better be good and know how to solve problems for your clients, or else there will be a lot of churn in your own business.
What are DACH companies in need of right now?
Generally speaking on the tech front:
- The ability to scale up their business
- An ability to recruit the right people (i.e. outsource them via nearshoring if they can’t find them via Xing or referral or LinkedIn)
- Stability on key business projects
- Low churn rate
- Risk mitigation
- A low barrier to get a project started
- True expertise
We met a CEO in Switzerland, actually, who ran into a problem similar to this blog. He had two business-critical tech projects to roll out. His COO was handling the first one. The COO tried desperately to hire in-house talent instead of nearshoring, and the hiring process was taking forever. Because Project 1 couldn’t launch, Project 2 got pushed, and budgets blew up. The COO really wanted an in-house, hired team, but eventually it destroyed the financials and the Swiss CEO had to fire the COO.
Meanwhile, within DACH, there’s any number of nearshored teams ready to go once you do biz with them. They’ll come in with expertise and get a project going, providing stability and constant tracking of what’s happening. In the time it would take you to hire 2-3 people for your project internally, you could be 70% done with a nearshored business.
That’s the fulfillment value nearshore providers need to be screaming from the rooftops about.