Nearshoring vs. outsourcing: similar time zone and short geographical distance
A large corporation in the car manufacturing sector arranged a large five year planned modernisation programme of internal logistic centres with the main focus on software updates and improvements. A development team of an ERP system of the largest logistics center had been working hard for 16 months. They were assisted by an outsourced development team in an Asian country with a large time zone difference of 6.5 hours. There were a number of issues that needed to be dealt with including:
- There were many management difficulties, since many clarification meetings had to be postponed due to the time zone differences.
- Many operational issues were based on the cultural differences between the core and remote team members.
- The source code quality was often not adequate to support necessary corporate testability and maintainability engineering standards.
Since the planned release dates had been already delayed, it was decided to reduce the number of remote team members and search for a new remote team. A new remote team had been found and formed based on a nearshoring principles. The team had been hired to fulfill the following requirements:
- Following the strong technical documentation standards, due to the planned appointments of scheduled corporate meetings
- Fulfillment of the end-to-end development engineering cycle (test first, pattern based programming, standardised deployment paradigms) based on the customer’s corporate engineering regulations
The work packages had been created on time according to the customer’s recommendations and covered 100% of their development phase activities. The customer’s representatives noted at official mutual meetings that the problem of the cultural gap between the engineering teams had been overcome. The one hour time zone difference presented no difficulties for the operational management. Since a very high development performance of the collaborative work had been achieved, it had been decided to extend the number of remote team members and split the remote team into several teams (2-3 persons) based on the following thematic functional directions:
- Logistic units (articles) reference database (including data migration from existing legacy software as well as incoming data validation)
- Internal transport container loading algorithm for a logistics center
- Software based actions audit of the logistics center employees
- Data archives management of the collected shipment statistics
The customer has achieved 200% of the planned results based on key performance indicators (KPI). This took place a month after the new remote development started and returned to the planned strategic project milestones in the software release cycles. The customer’s core development team has been able to maintain a passed source code from the remote team with the use of fewer financial and human resources. The budget spending by the remote team has increased 2.82 times and has helped to achieve confidence towards new projects and new mutual collaboration in enterprise software development that has overcome the current project boundaries.