Managed service provider

What is the Difference in Nearshoring & Outsourcing (And How This Helps You Choose a Managed Service Provider)

September 16, 2016

All industries utilize some sort of outsourcing. Outsourcing is a broad term that encompasses a variety of specific activities, but it refers generally to hiring a third-party contractor to assume certain responsibilities. In the realm of IT, outsourcing refers to hiring a managed service provider to take on some or all of the company’s IT responsibilities. It can also refer to hiring out services like cleaning, legal work, accounting responsibilities, or even a company’s productive work, like manufacturing operations.

Defining ‘IT Outsourcing’

Within IT, there are numerous services that can be outsourced to a managed service provider. For example, companies can outsource their storage needs and computing needs to a cloud service provider. Similarly, they can transfer responsibilities for their business continuity and/or disaster recovery to a managed service provider. These outsourcing agencies can also handle other aspects of running an IT department, such as MDM, or mobile device management.

Outsourcing, however, is a broad term that is often confused with similar terms, such as offshoring, nearshoring, and onshoring. Outsourcing merely refers to the act of hiring a third-party vendor to take over certain tasks that a company needs to complete. Outsourcing doesn’t imply whether the vendor is located across the street or around the world. Yet it’s often confused with ‘sending jobs overseas’. In the realm of IT managed service providers, this isn’t usually the case at all.

For example, outsourcing to a cloud service provider in China or India wouldn’t make sense for most U.S. businesses, because the latency would be much more than most systems and users could tolerate. Plus, the data has to be kept within the legal jurisdiction of the business, in many cases. Cloud service providers are generally located in the same country as, and often in the same region, as the businesses they service. That way, they are close enough to offer a high performance of service and operate under the same data privacy laws and regulations as the businesses they serve.

Defining ‘Nearshoring’

Under the broad concept of outsourcing are several terms that do indicate where the third-party vendor is located in relation to the business it serves. Nearshoring is one of these terms. It refers to vendors that are not in the same country as the business, but are also not all the way around the world. Nearshoring usually refers to outsourcing to neighboring nations. For example, a U.S. business outsourcing work to Mexico or Canada.

Other Similar Terms

Similar terms that might get confusing include onshoring and offshoring. Onshoring is outsourcing to a vendor on your own native national soil. Offshoring, by extension, isn’t onshoring or nearshoring. It usually refers to vendor relations that are very far away, sometimes all the way around the world. While it makes sense to outsource this far in some cases, it rarely makes sense to do so in the case of IT outsourcing, for the reasons mentioned above. Language barriers also make these relationships impossible. Most businesses want to be able to pick up the phone, have a quick chat with their managed service provider, and hang up with the confidence that both parties are in complete understanding and agreement about the situation.

Choosing to ‘Right Shore’ Your IT Managed Service Provider

What is rightshoring when it comes to IT managed services? Rightshoring refers to choosing a managed service provider that is close enough to provide great service and responsiveness, while being far enough away that their data center wouldn’t be threatened by any of the natural disasters that could befall your business. For example, if your entire state is hit by a hurricane or earthquake, it would be tremendously beneficial to have your data tucked away with a cloud service provider in another state or region.

Of course, there’s much more to choosing a managed service provider than just location. Learn more now when you download the whitepaper: Managed IT Services For Small Businesses. It’s your free gift from TOSS C3.

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