Nearshoring in business is a trend with a granted type of attention. Some entrepreneurs find it useful and profitable, but for others, it is still an unexplored area.
One of the first benefits of nearshoring is the ability to cut costs and concentrate on more competencies when hiring programmers. The outer nearshoring companies are to handle business functions of the client: customer care, human resources, collections, and software development as well; but before we go to the nearshoring benefits, let’s find out what it really is.
Nearshore is a model of outsourcing which allows companies to delegate business processes to companies or freelancers in the nearby countries. More and more countries every year estimate the nearshore advantages as something worth trying. This type of work is used either as the primary delivery model or as a part, combined with onshore resources. It is practiced so often mainly due to the similar or even the same time zone. And also it is difficult to overrate the benefits of nearshoring in cost-effectiveness.
Unlike offshore IT outsourcing, which means delegating software development to a company located in a distant country, nearshore outsourcing offers 5 main benefits:
1. Improved Engagement as a Result of Cultural Affinity
This advantage of nearshore comes down to culture. Eastern cultures tend to be more tepid when it comes to offering their opinions. Even the most qualified eastern Engineers may have a difficult time communicating risks and concerns or that they know a more efficient, more effective, or less costly way to accomplish your business objectives. It may also be very challenging for them to make autonomous decisions, preferring to wait until your next meeting to get explicit instructions from you. This can often result in projects not meeting deadlines or result in an overall less robust solution.
The ability of your outsource team to provide valuable insights and feedback is extremely valuable to organizations whose core competencies are not software development, such as healthcare, financial, or manufacturing firms. They rely heavily on the expertise of their partner and pay the largest price without this direction and guidance. The culture in America, more specifically Mexico, are more similar and have had more exposure to Western culture. As a result, your outsource team will have no issues providing you with expert guidance, and making the autonomous decisions required to keep your project on pace, and providing a robust solution that accomplishes your needs. This is one of the critical benefits of nearshore that leads to a much higher return on your investment.
2. Lower Costs
The growing scarcity of resources has driven up the cost for good talent, resulting in organizations trying to find ways to reduce operating expenses and overhead. Probably the greatest advantage of nearshore, or rather, outsourcing software development in general has been to leverage the lower wages experienced in developing nations. These outsource companies provide the equipment, facilities, and technical personnel to accomplish your goals at a lower cost than their US counterparts.
While nearshore resources may not be the lowest cost option, it does provide the highest ROI due to the other advantages covered in this list. Based on a recent survey, 24% of US IT Decision Makers felt that development and labor costs were the biggest obstacles to scaling business operations.
3. Same Time Zones as US Cities
When compared to offshore outsourcing, a major advantage of nearshore outsourcing for individuals managing an external team is the ability to engage with your team during normal business hours. Not only does this spare you from losing sleep, or working an odd schedule, it also opens collaboration between your internal development and their outsource counterparts, which is a major win for everyone. Daily huddles are an important part of most development methods today, and nearshore time zones make this as simple and convenient as working with a local partner.
4. Higher Code Quality
This benefit of nearshore boils down to quality of talent and improved collaboration. We can speak to this advantage from Mexico’s perspective. Mexico is home to some of the finest STEM programs in the world, churning out 130,000 highly-trained engineers and technicians annually. These engineers have been trained to be effective problem solvers trained in the most modern architectures and best coding practices. The quality of their education greatly contributes to their ability to provide code quality equivalent to their US counterparts. In addition, improved collaboration and shared time zones ensure both teams are awake, assertive, able to ask questions and to clarify requirements, ensuring the work gets done right, the first time.
According to a recent survey of over 200 US IT Decision makers, 68% of respondents indicated that the code quality of their external teams was equal to or better than their internal teams.
5. Better Infrastructure
The infrastructure in many Latin American countries is hands over fist more dependable than many offshore destinations. With many popular nearshore destinations being developed, you can rest assured that the infrastructure required to meet your business requirements will be in place. Choosing a partner in a country with reliable internet and communication infrastructure will ensure that your project isn’t sidelined due to unforeseen circumstances. Depending on where you outsource overseas this may not be an issue, but it is a critical component to evaluate when making your decision. Companies that have outsourced to Eastern Europe and India have learned this lesson the hard way, as they have had to deal with aging and oftentimes crumbling infrastructure, that has caused considerable delays on their projects.