Why the tech industry is addicted to Nearshoring?
Outsourcing and Offshoring
Seeking better alternatives to hiring an in-house development team led to the existence of outsourcing. Outsourcing is the practice of taking the work from the home office or company and moving it to an outside company to perform services and create products that were originally done within the home business. Outsourcing is generally used as a cost cutting measure that enables businesses to bring products to market more cost- efficiently. Outsourcing jobs are not limited to software development but for the purposes of this article, it will be the focus.
After outsourcing landed in business lexicon, next came offshoring. Offshoring is a specific type of outsourcing in which work is sourced to a business that is not in the home country and usually tends to be in a different time zone where English is not the native language. Offshoring examples would include a US business offshoring its customer service to a call center in India.
Nearshoring
After years of offshoring, businesses began to prefer to work with nations that were geographically close, versus those further away and therefore in highly different time zones. This proximity trend became known as nearshoring. Using the US as an example, its nearshoring partners are in Latin America. Latin America offers the same time zones, similar cultures, strong work ethic, and highly trained and educated individuals, particularly in IT and software development. All this makes working with a Latin American country highly desirable for US businesses. As time has progressed, more and more businesses interested in outsourcing look for a good nearshore partner because of the advantages nearshoring provides over offshoring.
What Makes Nearshoring a Great Choice for Development
There are several key factors that a business should look for when entertaining options of working with outsourcing software development projects. Nearshoring provides the greatest benefits with the least amount of risk involved, making for overall great partnerships.
- Education
A nearshore development partner should have teams that are highly educated and adept at the technological work they will be performing. Access to higher education is becoming more accessible in Latin America. Chile and Brazil have high-ranking universities that matriculate a prepared workforce. On a more basic level, literacy rates across Latin America are climbing and Costa Rica, for example, has a 97.9% literacy rate.
- Emphasis on IT Training
Many universities and technical schools in Latin America offer programs in software development and IT solutions. Through government initiatives, private investments and individual demand, Latin American countries have been investing in technology education that produces top-tier talent.
This emphasis on education with a specialization in software development and engineering has led to a highly educated workforce in Latin America, making it an enticing destination for nearshoring.
- Nearshoring with English Speakers
A great nearshore partner will speak English fluently. Sharing a common language helps eliminate confusion, delays and errors. Latin America and particularly those working in the technology field have a high level of spoken and written English. Once again, nearshoring provides an excellent alternative to offshoring.
- Nearshore Infrastructure
Most of Latin America has a relatively modern telecommunication infrastructure, that includes fiber optic. Fiber-based networks are considered the most advanced subterranean transport infrastructure for data services. Latin America is well aware of the advantages of fiber optic connectivity and digital readiness and is committed to investing in both.
According to Statista, “In 2019, Chile reached a digital readiness index of 14.86 out of 25, the highest score among countries in Latin America and the Caribbean. The South American country is thus in the middle or "accelerate" stage of digital readiness.”
- Nearshoring Cultural Dynamic
Work culture in Latin America shares similarities with that of the US. Deadlines, commitments, and responsibilities are recognized and met. This makes partnering with Latin America an easy choice versus outsourcing to a geographic location with a drastically different perspective on work culture.
Benefits of Nearshoring
As a consequence of a great nearshoring partnership, and all the aforementioned attributes, there are significant benefits to the North American business.
- Launching Quickly
With nearshoring, you’ll work with an external team located in a similar time zone. This results in quick communication without hours of lag in between responses, or late night or early morning meetings. Working with a team who fluently speaks your native language makes the entire collaboration faster than outsourcing elsewhere. Likewise a similar work culture will result in timely delivery of products. Each of these attributes result in development and launch of products or services rapidly. Less time spent in the development phase of a product and this gives the business the advantage of launching to market quickly.
- Reduced Cost
Another advantage of nearshoring is the reduced cost to the North American business in several areas. Outsourcing reduces the cost by engaging nearshoring businesses in countries where wages are lower. Secondly, the business doesn’t need to undertake the human resources time and expense of hiring and onboarding software developers and engineers, as the nearshoring business will do this.
- High Quality Products & On-Time Delivery
A software delivered and launched with bugs or security problems can be near-fatal for a business. It’s important that the individuals working on such products are highly skilled. Because of the increasingly high level of education and specialized training in technology fields, Latin America is a top choice for businesses looking to ensure that their products and services are flawless.
Due to a similar work culture and good communication between parties, products and services are delivered on time. There is no room for missed deadlines and this is understood due to parallel work cultures and fluent English communication
About Pixel506
Since 2009, Pixel506 has been a trusted nearshore partner for companies from different industries and different countries. We have over a decade of experience helping big, medium, and small companies succeed in the digital world. We're a Brooklyn-born company, but our offices are located in Costa Rica, Peru, and Nicaragua. Our time zones (GMT-5 and GMT-6) are the same or similar as U.S.-based companies. We understand that taking the first steps towards outsourcing business processes can be challenging, but our onboarding process makes the transition smooth and effective from the start. We work with bilingual software engineers and creative marketers, who speak Spanish and English fluently. With such a large talent pool to choose from, we can establish an effective nearshore product development team that fits your needs exactly. We make sure to get to know our clients so that we can create a ‘pixel-perfect’ strategy in a timely manner that works for their specific vision. Get in touch with us today for more information or to hire us for your software development solutions.
Key Takeaways
- Outsourcing is the practice of taking the work from the home office or company and moving it to an outside company to perform services and create products that were originally done within the home business.
- Offshoring is a specific type of outsourcing in which work is sourced to a business that is not in the home country and usually tends to be in a different time zone and English is not the native language.
- Nearshoring is a type of outsourcing in which the work is moved to nations that are geographically close and in similar time zones.
- When discussing outsourcing, nearshoring provides the greatest benefits with the least amount of risk involved, making for overall great partnerships. This is due to advanced education, IT training, high levels of English fluency, similar time zones, and cultural similarities.
- The benefits of nearshoring include: quicker time to market, reduced costs and high-quality products delivered on time.
- Pixel506, a nearshore company based in Costa Rica helps businesses gain a competitive advantage and exceed business goals through user experience strategies, data, and innovative solutions.
Related Resources:
- What is nearshore development? The complete guide
- nearshore software development
- nearshore, vs offshore vs onshore
- Find a Nearshore Partner with the Right Cultural Fit” Interview
- Nearshoring Costa Rica
- How to Hire a Great Nearshore Development Team
- Top 4 Benefits of Nearshore Outsourcing for SaaS Companies
- 8 Reasons to Consider Nearshore Software Outsourcing
- 4 Successful Nearshoring Partnerships
- Top 5 Reasons to Choose Costa Rica for Nearshore Development
- “What is nearshore development? The complete guide
- “What Is Nearshore Development, and What to Look For in a Partnership