|The near shore Outsourcing Industry in Europe|
In the North Western part of the globe, many companies discover the benefits of outsourcing and start to locate parts of their service production to a third party provider. This can take the form of offshore outsourcing, which is the relocation of service development from in-house to an external service provider, usually on another continent. On the other hand, some companies prefer not having to reach that far, choosing to work with a provider who is not more than two time zones away from home. This growing type of outsourcing is called near shoring and represents a widely adopted sourcing strategy in the European Union. This article provides information on the European near shoring industry.
Recent market research by EquaTerra investigates how numerous European companies perceive the trend of near shore outsourcing. The study reveals the most prominent accelerators of near shore outsourcing. Cost service development is named by 67% of the interviewed companies as main driver to outsourcing. 39% state that they benefit mostly from the access to third party expertise and 38% underline that they can improve their service quality with help of near shore outsourcing.The companies from different European countries were further surveyed about their preference of near shoring over off shoring or vice versa. The results demonstrate great differences in distinct countries. Dutch companies, for instance, state that 55% of their outsourcing activities happen off shore and the remaining 45% are near shored. In the UK, in comparison, 71% of the outsourced services are developed offshore.
According to the Central and Eastern European Outsourcing Association study from 2010, near shoring IT services from Western to Eastern Europe is a major trend. In comparison to 2009, the near shore profits rose 23% up to €3.7 billion last year. The global economic and financial crisis did not have a destructive impact on the Eastern European outsourcing market and rather brought opportunities for start-ups to jump on the near shoring bandwagon. In the “crisis years” of 2008 and 2009 many new companies entered the outsourcing industry and started to offer their services to buyer companies.
One major advantage of near shoring from Germany, France or the UK to Eastern European nations such as Russia, Poland and Bulgaria is proximity. Buyers enjoy the fact that a flight from Frankfurt, Paris or London to Moscow, Warsaw or Sofia does not take more than a few hours. Eastern European educational institutions further have a good reputation, especially in the fields of science and technology. In 2009 the IT market volume in Eastern Europe grew significantly and attracted a greater range of outsourcing clients. Another benefit of near shoring to Europe is shared cultural standards in the buyer as well as the supplier country.