10 Advantages of Nearshore Outsourcing

Top 10 Advantages of Nearshore Outsourcing

In the last decade, the geographic options for outsourcing software development have increased.  These options fit into one of the following outsourcing models :  nearshoring, offshoring and onshoring. While traditional offshoring to Asia or Eastern Europe has always been lauded for it’s cheap labor, for companies that practice agile, or require better collaboration, communication, and a higher level of engagement, the advantages of nearshore outsourcing are clear.  The advantages of outsourcing are greatly increased when you look beyond hourly rate and consider each factor that contributes to the overall ROI of the engagement. The intention of this article is to provide you with the full picture of the benefits of nearshore and how your organization can leverage those advantages.

10 Benefits of Nearshore Outsourcing Infographic

Advantages of Nearshore Outsourcing Infographic

1. Short Flight Times from Anywhere in the US

One often overlooked benefit of nearshore outsourcing is the ability to get face to face with your team, supported by shorter flight times when compared to offshore. Smart companies find great value in being able to travel and meet with the organization they plan on partnering with, their teams, and by evaluating this experience to determine if the outsource partner will be a good fit in terms of culture, infrastructure, and maturity. These in person  engagements with multiple points within an organization, present a more accurate representation of the service you will receive and the people you will be working with, than your interactions by phone or email with the company’s sales staff. Because let’s face it, these people are trained to tell you what you want to hear. But are their promises backed by reality, or a fictitious construct designed to get you to sign on the dotted line. Only by meeting and engaging and immersing yourself in the partner’s daily culture, can you truly evaluate the partner, and seek to detect those subtle cues that let you know if the engagement will be a nightmare or a dream come true down the road. You can answer such questions as how was your team treated, what environment does the outsource company provide their employees to work in, how do the employee’s feel about the company, are the employee’s communication skills as good as were promised? The list is endless. As you can see, being able to engage in person with your partner is a huge advantage of nearshore. Offshoring requires you to travel halfway across the globe, increasing the time and cost to meet your partner.

2. Same Time Zones as US Cities

Let’s face it, waking up during the wee hours of the morning to communicate with your offshore team is a total drag. If you have been managing an offshore development team, I am sure you know what I mean. 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.


3. Easier Integration with Internal Development Team

It is not uncommon for outsourced teams to take several months getting accustomed to your organization’s processes, and knowledgeable enough about your applications to begin making valuable contributions. This is typically not the case with a nearshore team. One of the key advantages of nearshore software development is engaging with a team that possesses cultural similarities, a shared language, and technical expertise that enables the external team to integrate with your existing team quickly. Improved collaboration and communication, and the respect that comes from working with a peer who possesses a similar level of technical expertise, increases the rate at which internal resources and external resources can form a comradery. This in turn facilitates the knowledge transfer required to get your external team to  learn and adopt your processes, and get up to speed on the details of your application quickly. By accelerating the on-boarding process and knowledge transfer, your external team can begin making value contributions early in the process, greatly improving your ROI, and ensuring your project deadlines are met.

4. Intellectual Property Laws are Similar to the US

For companies whose key product offering is a software product, or who’s application contains proprietary functionality, protecting your intellectual property is critical. This is one of the riskiest points when it comes to offshoring software development. In some Eastern European and Asian countries, intellectual property laws are weak, and do not provide US firms much protection if your property is stolen. In addition, in some countries who are under authoritarian rule, you may stay up at night worrying just how secure your property is from state entities that seek to use your technology to its advantage. Here lies another advantage of nearshore. Many nearshore countries, like Mexico, have strong intellectual property laws, that closely resemble the US. In addition, many nearshore partners are headquartered in the United States, providing you with the exact same protection you count on at home.

In a recent survey of over 200 US IT Decision Makers, the number one challenge leaders faced when outsourcing, was a lack of IP Protection.

Challenges of Offshoring


5. Higher-Level of Engagement Through Similar Culture

This advantage of nearshore outsourcing 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 South 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.

Nearshore Culture and Language

6. Availability of Quality Software Developers

The market for software engineers in the United States has always been competitive. Companies large and small have seen the costs of talent skyrocket, and the lengths they must go to (remote workers, relocation, perks) to acquire that talent increase. An often-stated advantage of nearshoring software development is simply the ability to acquire talent that otherwise wasn’t available in the US, or to avoid the premium being demanded for that talent. By being able to find talent that works on the same schedule as your internal team, possesses equivalent technical skills, and speaks the same language, is a major boon for companies facing these challenges. This advantage will become ever more prominent as enormous tech companies with unlimited budgets, and brand appeal continue to snatch up the countries best and brightest, driving up compensation.

Available Resosurces

7. Better Infrastructure than Many Alternatives

Better infrastructure is another advantage of nearshore outsourcing. 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.


8. Improved 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.

When we recently surveyed 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.

Better Code Quality

9. Improved Communication Between External and Internal Resources

As you have probably noticed by now, proximity is the underlying factor that contributes to many of the advantages of nearshore software development. This one is no different. Being in the same time enables seamless communication between internal and external teams. Many schools in Latin America teach English as a core requirement, resulting in a large population of Latin American Engineers that speak fluent English. This in turn, ensures your nearshore team can communicate with your internal team with ease, making sure subtleties don’t get lost in translation. A similar culture enables internal and external teams to bond, improving comradery and trust, and facilitating better and deeper conversation. Everything happens on your time line, and there are no delays that cost your project valuable time.

In a recent survey of over 200 US IT Decision Makers, 49% of respondents indicated they had difficulty community with their resources overseas.

Nearshrore Advantages Survey Communication

10. Lower Cost than US Developers

The growing scarcity of resources has driven up the cost for good talent, results 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 was the biggest obstacle to scaling business operations.

Development and Labor Costs

Video: 3 Reasons You Sould Nearshore Software Development

The Advantages of Nearshore Outsourcing Are Clear

Throughout this article, we have discussed the numerous benefits of nearshore outsourcing. Not every benefit will be critical to every organization evaluating this choice. However, whether you eventually decide on an offshore or nearshore partner, it would be advantageous for you to evaluate each point and determine how it would affect your business outcomes. This will provide you with the piece of mind that you chose the best solution for your organization. After evaluating, still not sure? No problem! Our expert consultants can walk you through each model and help you identify which would be the best fit your unique business requirements.

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