Business Outsourcing Types: Shore Up Your Success in Poland

May 17, 2024

Business outsourcing

Outsourcing business operations to different locations is gaining more and more popularity. The emergence of several types of this kind of practice shows just that. First, we had nearshoring and offshoring. Now, there’s also friendshoring and reshoring joining the parade. Looks like there’s a whole bunch to choose from.

But jokes aside, all have something in common—and no, I’m not talking about the shoring suffix. All offer some great benefits but aren’t free of limitations either; thus, you should choose particular approaches wisely to make the most of them. And most importantly, you should pick the right country to do so. One destination that’s increasingly on the radar is Poland.

In this article, we’ll explore why choosing this Central European powerhouse to expand your business operations could be your best move yet. We’ll also break down each of the aforementioned outsourcing practices and take a look at what they have to offer.

Why Outsourcing to Poland Might be Your Best Move Yet

Business success

Poland is among the top globally attractive sourcing locations. And there’s a reason for that. Actually—quite many. Here’s what makes Poland an appealing and vibrant environment for businesses to thrive.

Stable and Thriving Economy

For decades, owing to its solid fundamentals and timely macroeconomic policies, Poland has consistently stood out as a strong performer in Europe’s economy. So much so that, unlike many other countries, it managed to avoid recession during the global financial crisis of 2008-2009 and it has maintained steady GDP growth ever since. It also  weathered the storms of more recent occurrences, as the International Trade Administration states:

“Broad fiscal measures and monetary support cushioned the economic impact of the pandemic and eased the economic repercussions of Russia’s full-scale invasion of Ukraine.”

Rich Talent Pool

Poland’s yet another exceptional asset lies in its skilled IT workforce. With a population of close to 40 million, the country harbours an abundant pool of IT specialists. Let the numbers speak—Poland’s teams outperform the global average by ~50%

And this insightful post illustrates how relocating the developer team from the Bay Area to Poland yielded similar performance while saving 40% in costs.

What’s striking is that this reservoir of specialists comes at a lower cost of living compared to many Western European countries, allowing businesses to offer competitive salaries while still ensuring a high quality of life for employees.

Infrastructure and Connectivity

Over recent years, Poland has poured substantial resources into upgrading its infrastructure, resulting in modernised roads, ports, and logistics hubs. This revamp has made it an enticing spot for manufacturing and exporting companies, thanks to the country’s solid links to European markets and beyond. Plus, with widespread internet access and high-speed connectivity, Poland’s telecommunications network paves the way for seamless business operations.

Strategic Location and Access to Market

Poland’s location in the heart of Europe grants it convenient access to the vast European market. Its close proximity to major economic hubs like Germany presents a huge advantage. This geographical position streamlines transportation and trade routes, allowing businesses based in Poland to easily reach key markets within the EU and neighbouring regions.

Cost-Effectiveness

In contrast to Western Europe, doing business in Poland is more budget-friendly. Everything from salaries and real estate to operational expenses can be significantly lower, without compromising quality and productivity. This cost-effectiveness can be a major selling point for companies looking to boost their financial performance.

English Proficiency

Poland’s IT specialists excel in English proficiency. This facilitates seamless communication in global business environments, fostering effective communication with international partners and clients.

Business Outsourcing Types

Outsourcing a company to Poland can be viewed through the lens of several broader business trends. What are they?

Nearshoring

Let’s start with nearshoring. What is it exactly? To put it simply, nearshoring is a practice of outsourcing business operations and processes to companies in a nearby or nearby time zone location, typically in a neighbouring country or region. Hence, Poland is a great choice for European countries seeking to nearshore their operations.

Benefits of nearshoring

This practice entails a suite of benefits for businesses, including:

  • Better communication and teamwork: With nearshoring, teams can benefit from geographical proximity and time zone alignment, which allows them to engage in smoother interactions and promptly address challenges as they pop up. This drives a more productive work environment.
  • Cost savings: Contrary to onshoring, nearshoring offers cost advantages since it leverages lower labour expenses in nearby countries. Yet, while it brings cost savings compared to domestic operations, it may entail higher costs than offshoring to more distant locations. We’ll cover offshoring in a sec.
  • Easier management and control: Given the proximity and shared time zones, having a nearshore team brings about simplified management and supervision of outsourced tasks. This allows for more hands-on oversight and direct influence over the work.
  • Scaling flexibility: Nearshoring gives you the freedom to scale teams up or down as you see fit to adjust to evolving business needs.
  • Access to specialised skills: Nearshoring provides access to professionals who may be scarce within the local talent pool. Tapping into the expertise available in nearby countries enables businesses to fill skill gaps, boost competitiveness, and innovate effectively.
  • Reduced cultural and language barriers: Unlike offshoring, nearby locations tend to share more similarities with the home country, leading to smoother communication and collaboration.

On the whole, nearshoring enables companies to leverage local talent and resources while maintaining closer oversight and cooperation. You could say it’s like a middle ground between the cost savings of offshoring and the hands-on management perks of onshoring.

Offshoring

Offshoring business outsourcing type

Now that we discussed nearshoring, time to shed some more light on another practice of outsourcing business operations—offshoring. It’s actually similar to the former, but the difference is offshoring has to do with expanding a business to a distant, overseas location, usually to a country far away from the organisation’s home base—one with lower labour costs and access to specialised talent (but we’ll get to that). Businesses located outside of Europe may regard Poland as a suitable choice for offshoring operations.

Benefits of offshoring

Here are the key advantages that offshoring brings:

  • Cost savings: Offshoring lets companies tap into cheaper labour abroad, resulting in significant financial savings. And these savings tend to be much greater compared to nearshoring, as the labour and operating expenses are typically much lower in far-off locations.
  • Access to specialised skills: Offshoring opens up access to a wide array of skilled and specialised talent that may not be easily found locally.
  • Increased resources and flexibility: By choosing to offshore their operations, businesses leverage a broader spectrum of resources and suppliers in the offshore location. This not only enhances pricing dynamics but resource accessibility as well.
  • Extended availability:  Setting up operations in a different time zone can enable round-the-clock availability and faster responses, smoothing customer service and boosting productivity.
  • Tax perks and financial incentives: Certain countries provide tax holidays, subsidies, and other monetary incentives to attract foreign investment, which adds extra appeal to offshoring in terms of cost-effectiveness.
  • Improved focus on core business: Delegating non-critical tasks to offshore locations allows companies to allocate resources more effectively, prioritising core operations and strategic initiatives.

There are, however, potential downsides to offshoring, as well. Some of them are communication challenges, reduced oversight, and potential reputational risks. In light of this, companies need to thoroughly weigh all the pros and cons before pursuing an offshoring strategy for their business.

Friendshoring

Friendshoring business outsourcing type

With nearshoring and offshoring ticked off the list, it’s another term’s turn to steal the spotlight. That said, we’re introducing friendshoring. 

Friendshoring is a new trade and supply chain strategy that involves shifting production and sourcing by businesses and governments away from geopolitical rivals, like China. Instead, they outsource business operations within their social or professional network, such as friends, acquaintances, or referrals. This approach is often marked by strong trust, mutual understanding, and shared goals among the parties involved. Poland’s membership in both the EU and NATO is in line with this strategy.

Benefits of friendshoring

Friendshoring, just like the other practices we’ve covered so far, offers an array of benefits. Let’s see what the key ones are:

  • Increased reliability of the supply chain: Friendshoring boosts the trustworthiness of the supply chain by avoiding geopolitical tensions and disruptions. It prioritises countries that maintain close political and economic relationships, minimising the chances of such issues affecting operations.
  • Improved supply chain resilience: Moving production and sourcing to “friendly” countries helps companies reduce reliance on authoritarian regimes, making overall supply chains more resilient.
  • Enhanced access to markets and suppliers: Friendshoring allows companies to take advantage of better access to international markets and a broader array of suppliers in allied countries.
  • Faster response times and speed to market: Having operations and sourcing close by in allied countries can enhance communication, coordination, and responsiveness. This ultimately translates to quicker delivery.
  • Potential for cost savings: While not as big as when you offshore, friendshoring might still help you save some money, particularly in industries that rely heavily on labour.

Although beneficial in many ways, it’s worth pointing out that friendshoring has its share of potential drawbacks, such as increased costs for raw materials and labour and limited supplier choices. There are also concerns regarding its impact on global trade dynamics. Best to keep those in mind before deciding on a friendshoring approach.

Reshoring

Finally, we have reshoring. It’s about bringing business operations or manufacturing processes back to the company’s home country after having outsourced them to foreign locations. Given Poland’s improved business conditions, Polish companies that had previously offshored might find reshoring a compelling choice.

Benefits of reshoring

Reshoring is a strategic move businesses make driven by, among others, these factors:

  • Improved product quality and customer satisfaction: With reshoring, companies have more control over manufacturing and uphold stricter quality standards, leading to better products for consumers.
  • Enhanced innovation and competitiveness: Reshoring drives up investment in R&D, keeping domestic industries innovative and globally competitive.
  • Greater control over production and supply chain: Reshoring gives businesses a stronger grip on their manufacturing operation and supply networks, fostering efficiency and responsiveness.
  • Reduced logistics costs and lead times: By being closer to customers and having shorter shipping distances, companies can cut down on logistics costs and speed up delivery times.
  • Fostering domestic industries and employment: Reshoring contributes to reviving local manufacturing, fortifies regional economies, and generates job openings within the home country.
  • Improved protection of intellectual property and technology: Keeping production at home can ensure stronger protection for companies’ innovative ideas and technological advancements.
  • “Smart” manufacturing facilities: Bringing manufacturing back home can enable the development of more technologically advanced, automated, and data-driven production plants.
  • Reduced supply chain risks and disruptions: By reshoring, companies can reduce the effects of geopolitical tensions, trade uncertainties, and other global issues on their supply chains.

Before hopping on board with bringing production back home, you should acknowledge the challenges reshoring entails. These include significant upfront costs for infrastructure setup, staff training, and equipment upgrades, as well as competition from cheaper manufacturers abroad. In addition, there’s a shortage of skilled workforce and the need for integrating new tech, along with the possibility of increased wages for domestic labour.

Which Countries Should Consider Expanding Their Business Operations to Poland?

With the suite of advantages we just presented, it’s no wonder Poland has positioned itself as a globally favourable sourcing destination. Which countries, in particular, can benefit from relocating their businesses to this Central European country or already do so?

Choose The Outsourcing Strategy That’s Best for Your Business

Leveraging various locations across the globe for your business operations is gaining popularity. And with various approaches emerging to meet different needs, you’ll be spoilt for choice. But remember to choose wisely. While each strategy, be it nearshoring, offshoring, friendshoring, or reshoring, offers its own set of benefits, they all also have their limitations you need to be prepared for. In the end, understanding the nuances of each outsourcing practice empowers businesses to drive success.

Whether you’re looking to nearshore, offshore, friendshore, or reshore your business (depending on where you’re based), Poland deserves a spot at the top of your list. Regardless of your location, the country offers a suite of advantages all the same, making it a favourable destination for shifting your business activities.

Oh, and there’s one particular advantage to Poland that we didn’t mention before. What’s that? We are! That’s right. Shaped Thoughts is a Poland-based company, and we’ll happily set up your software development nearshoring or offshoring centre here. What do you say? Tell us during a call ;).

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