This is the question that I have been asking myself for some time whenever we consider opening a new office. In the end, why does a client choose a nearshore outsourcing solution rather than an offshore one? Of course, at first we will find reasons related to cultural proximity, a reduction of the time difference or language. However, the more time goes by, the more I realize that customers are now eager to have a mature relationship, based on project management within the offshore centre (we have always stated it and this trend is being confirmed more and more each day), or based even on an increase in functional expertise within the remote team. All our quality surveys that we carry out among our clients show that they expect teams to develop more functional competences. To this end, customers expect project managers or analysts to be more and more present in their premises. Consequently, non-EU countries are losing ground in terms of flexibility, as they face visa issues (fast delivery, limitation of annual stay, work permit etc.). Thus, a great many French customers are unknowingly guilty of many violations of labour force and immigration laws.

This is one of the main advantages of European nearshoring (Bulgaria, Romania, The Czech Republic, Slovakia, Poland etc.) compared with North-African nearshoring (Morocco, Tunisia). Free movement supports these new organization methods that customers are expecting. Exchanges can thus be more easily adapted, they can meet emergencies, they can rely on several people, as often as necessary…
Our German customers are particularly fond of this practice, which has been adopted on a general scale in Poland, as we noticed.

Tax legislation and Research Tax Credit (RTC) in particular are an equally important reason for preferring the European option. Indeed, numerous outsourcing and consulting companies like Pentalog have registered offices outside France, but within the European Union. Thus, a French-registered company cannot, under any circumstances, outsource work that forms the object of an RTC declaration outside an authorized site. An approval can be granted only within the borders of the European Union. To make up for this shortcoming, there are certain local tax benefits related to training, in Tunisia in particular, but they are not directly reflected in customer prices. In a proven eligibility case of RTC outsourced works, there is no doubt as to the European competitiveness, as the daily costs of an engineer is decreased by 30%, while initial prices in Maghreb and Eastern Europe are almost identical.

As they lack the intra-community tax advantages and have less flexibility in terms of free movement compared to Eastern European alternatives, can offers coming from the Maghreb be deemed as IT Nearshoring? In the end, the only advantages that are left are French speaking abilities and the distance (almost identical with Eastern Europe). I am still and always considering the fact that, although costs are almost the same, French speaking abilities in countries like Poland and Romania remain satisfactory, while their English speaking skills are far superior. As regards French companies, they have considerably improved their English skills and are looking for less and less French-speaking employees. Therefore, Europe still has a clear advantage in terms of nearshore outsourcing.