Give the digital and technological landscape we have today, software development is in high demand. Not only does it enable companies to generate user-requested programs, it also covers the engineering, design, and testing of potentially market-changing applications. Because of this, software developers are considered an asset to any business.
Since developers are often well-paid, many companies—especially small businesses—often try to stay within budget by finding cost-effective solutions for every development project. Thankfully, there is in fact a tried-and-tested solution that many organizations turn to when in need of new talent; nearshore outsourcing.
Do you want your company to achieve its goals faster and improve all of its day-to-day operations? In this article, we’ll cover the basics of nearshore software development and how it can benefit your business.
Nearshore outsourcing is getting work or services done by agencies located in countries near you. For example, American businesses can decide to outsource their work to Colombia, Canada, or Mexico.
Compared to offshore and onshore outsourcing, nearshore outsourcing is a lot less complicated and a lot more beneficial. In addition to having cultural similarities with the person or team you will be working with, geographic proximity means fewer travel costs, minimal time zone difference, and better communication. Workers will likely speak the same language you do, making it far easier to discuss projects and concerns with your outsourced team.
In respect to onshore outsourcing (onshoring) and offshore outsourcing (offshoring), nearshoring is somewhat the middle ground. Nearshore software development works quite similar to offshoring, with the location as the only difference. You basically outsource your needs to a third-party agency is geographically near your location—hence the name. Offshoring, on the other hand, is when a business gets services from any foreign country regardless of its proximity.
These are the top 7 reasons why companies prefer nearshoring when looking for a software development team:
1) Shared Time Zone. Most US companies often face challenges when working with software development firms in Asia due to time zone differences. Recent studies have shown that one-third of American firms that outsourced to India saw the 10+ hour-time difference to be a major obstacle.
Those who serve as the core team of an outsourcing software provider operate within hours that are the opposite of normal business hours in the US. These work hour differences can lead to problems in making a timely collaboration and cause a significant drop in efficiency and effectiveness.
On the flip side, nearshore software developers work in a time zone similar to your company. Matching workdays are crucial in terms of software development methodologies like Agile and Scrum. Face-to-face meetings are also easily done. Project managers in the US no longer have to bear a 20+ hour trip to Asia if the people they are meeting are just in South America or Latin America.
English is also spoken as a second language and is widely considered as the main language of commerce.
Most importantly, countries in this part of the world share the western culture in America. They have a strong connection to the US commerce and pop culture. Many people in Colombia are updated in US politics, and US news is viewed more often than their own. US brands are also well-known and preferred. Additionally, US television programs and music have been consumed by Colombians and Latin Americans for a long time.
3) Lower Cost. One of the main reasons why companies explore offshore outsourcing for software development is the attraction of lower programming rates. Nearshore can often be as low-cost as offshore outsourcing. In fact, Nearshore outsourcing providers in Latin America and South America boast excellent programmers with hourly rates that are much lower than programmers with the same skills in America.
Why is that so? The US dollar—in most cases—is much stronger than other local currencies. Additionally, many nearshore programming firms are located in countries where the average salary and minimum wage is lower than the US. It’s not to say that they aren’t paid well—it’s just that the cost of living in their native country is often lower.
4) New Levels of Value. Nearshore outsourcing offers a fresh approach when it comes to hiring new talent. For US-based companies that may have had bad experiences with outsourcing, nearshore completely changes the game. This method gives you a new perspective on recruiting from other countries because many (common) offshore obstacles are avoided, including time zone differences, language, cultural barriers, and other complexities.
5) Potential Savings on Tax. Major IT outsourcing firms are under governments that try to support the industry by creating and imposing taxation laws that would favor the companies. This is yet another reason why most businesses turn to offshore software development; they see it as an ideal method to legally reduce their taxes.
6) Protected Intellectual Property. Regardless of where your developer is based, your application—once it’s been fully developed—legally belongs to you. When working with a nearshore software developer, you can rest assured your property (i.e. your software, the blueprints, the outline, the design, etc.) is safeguarded under US law.
This, unfortunately, is not always the case with a lot of offshore development firms in other countries.
7) No Hidden Costs. Most of the hidden costs that spring up for outsroucing can be avoided if you hire a nearshore software development team. When working in close time zone and proximity, there are fewer chances of developers overcharging you because of the transparency required. This keeps you from dealing with potential financial problems down the road.
More and more major firms like Apple and Amazon are reaping the benefits of nearshore development these days. It’s no surprise, considering the many benefits of hiring nearshore developers to act as a temporary in-house team when the need arises. Aside from saving your company time and money, nearshore developers allow your actual in-house team to focus more on client communications and effective project management.
Hiring a nearshore software development team is indeed one of the trending methods of recruitment right now. The future of outsourcing technical solutions appears to be getting brighter as it gains appreciation among tech giants in the business industry.