Lower your IT expenditure with onsite and nearshore with blended rates

Part I

Lowering IT expenditure is a common goal for many businesses. Utilizing a combination of onsite and nearshore resources, along with blended rates, can be an effective strategy. Here’s how it works:

Blended rates refer to a pricing model used in outsourcing or resource allocation, where a combination of different resource types or locations is used at different rates to calculate the overall cost. In the context of IT services, blended rates typically involve a mix of onsite and offsite resources, such as onsite employees and nearshore or offshore staff.

The purpose of using blended rates is to optimize cost savings while maintaining the desired level of service. Different resources or locations may have varying cost structures based on factors such as labor rates, overhead expenses, and market conditions. By blending these rates, organizations can strike a balance between cost-effectiveness and quality.

For example, if a project requires a combination of onsite and nearshore resources, the blended rate would be calculated by combining the hourly or daily rates of both types of resources in proportion to their respective contributions. This allows organizations to take advantage of cost disparities between locations while ensuring a cohesive team and effective collaboration.

Onsite and nearshore resources: Onsite resources refer to hiring professionals who work at your physical location, while nearshore resources involve hiring professionals located in a nearby country or region. By blending these two approaches, you can take advantage of cost savings while maintaining effective communication and collaboration.  Evaluate whether you can optimize the use of existing onsite staff before considering external options. Streamline their roles, identify opportunities for efficiency, and eliminate redundancies to reduce costs.

Cost advantages of nearshoring: Nearshoring to a neighboring country or region can often offer cost advantages compared to onsite hiring or offshoring to distant countries. Labor and infrastructure costs may be lower, resulting in reduced IT expenditure.  Consider nearshore providers who offer cost advantages while ensuring effective communication and collaboration

Language and cultural alignment: Nearshore teams often share similar cultural norms, languages, and time zones, making communication and collaboration easier. This alignment helps in reducing misunderstandings, improving efficiency, and ultimately lowering costs.

Assessing resource requirements: Determine the types of IT resources required for your projects or ongoing operations. Identify the skills, experience, and expertise needed and map them to tasks that can be assigned to nearshore or onsite teams.  Evaluate your current IT requirements and identifying areas where cost reduction is possible, determine which tasks can be effectively handled by onsite and nearshore resources.

Vendor selection: Research and select reputable vendors who offer nearshoring services and can provide the resources you need. Evaluate their experience, specialization, client testimonials, and track record of successful projects.

Finding the right balance between onsite and nearshore resources, along with blended rates, requires careful planning and execution. Stay tuned for part 2 of this article.

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