Budapest - The Capital of Nearshoring

Get to know Budapest and why it is a perfect choice for your nearshoring operations

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March 4, 2021

Last year was not a year for travel - and this year is not looking much better either. But life - and business - goes on and now more than ever it’s important to make the right business decisions. We are inviting you to a virtual tour of Hungary and why it has more than you imagine to offer for businesses like yours.

But first things first:

What is nearshoring and why would you choose it?

Nearshoring is the practice of outsourcing a segment of production or development, or a department of a company to a foreign country which is not so far from the business' headquarters.

Outsourcing is defined as a professional relationship between two parties, a client organisation and outsourcer, that involves the former contracting out the provision of a service to the latter. An outsourcer is typically specialised in the provision of the particular service, which supports the core business of the client organisation.

That specialisation means the outsourcer can be expected to provide either higher quality or less expensive execution of the outsourced service. Often both.

Advantages of OFFSHORE OUTSOURCING are rapidly diminishing as remote work is becoming the new normal all around the world. Although many companies still choose offshoring some tasks to increase their competitiveness on the market, it is safe to say that the disadvantages more likely will outweigh the advantages. 

Why? Here are just a few things to consider:

  • If you choose to outsource to a distant country, monitoring the end result or the quality of work becomes complicated.
  • Because of the physical distance and different time zones the chance of overlapping work hours are slim to none.
  • Relocation and transfer costs could rise easily - even more so with the current state of the world.
  • Most of the countries where it would be worth outsourcing to, have significantly lower living standards, education-, literacy level, and technological development.
  • This introduces several issues to the operations - like finding employees with sufficient technological skills.
  • Choosing a faraway country, you may face severe cultural differences, differing working style, complicated communication, and difficult onboarding.
  • These hardships may result in an insufficient end result or software that is not endowed with the features it was originally planned to have, or development time seriously exceeding the final deadline.

The setbacks of offshoring accumulate greatly in the IT field.

Development is in the core of most companies in the field. To outsource development, one needs to do a thorough background and quality check on the future partner because so much depends on the quality and capability of the software. It doesn't matter if the end product will be used for in-house processes, or sold to customers: a slow, malfunctioning, or complicated application can cause serious problems within the company and break customers' trust completely.

Needless to say, you should always aim for the best-performing development partners.

Nearshoring is the new (not-so-new) Offshoring.

Nearshoring tackles the labor shortage

There is a growing labor shortage in most parts of Europe. It is becoming more and more difficult to find skilled and experienced workforce. According to the study of Statista, hiring talented IT professionals has been a challenge for most tech companies in recent years. They have demonstrated that 18% of the analyzed companies worldwide found it rather difficult to hire proper application developers.

With the help of nearshoring, finding the adequate candidates or team for a development project becomes a lot easier, as organizations can stretch their grasp across the boundaries of their own country.

Top 10 IT area with biggest demand for talents

So you should Nearshore. Now What? (Ebook)

Now you need to find a location that makes the most sense for your business. Nearshoring entails that you are looking for an easily accessible place that can meet your needs, with little to no time difference, ease of travel and preferably not a wide cultural gap.

Read on in our ebook to see why Budapest is not only the capital of Hungary but could be the next capital of nearshoring.

Download here

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