How to pick a Nearshore Software Development Provider

Introduction

During the last seven years, I helped many different Tiempo Development clients make the move from outsourcing their software development to offshore providers to our nearshore model. Some companies come to Tiempo after working with offshore developers in India, Lithuania, Russia, the Ukraine, Vietnam, and other countries, often many time zones away from where their clients are. If you think nearshore development might be of value to you, or you want to better your current nearshore practice, here are a few practical suggestions.

Evaluating countries and their nearshore resources

It’s a basic step, but some companies never take it: Decide in which country it makes best sense to have your development performed. Several considerations play into this:

• Intellectual property protection. Are there agreements between your country and that of the development provider that help protect your valuable intellectual property, or are you incurring risk by outsourcing to that country?

• Public-sector support. Does the country’s government have a long-term strategy to support the software industry and technology services, or is it just that market forces and low costs cause an upswing in high tech there? For example, In Mexico, MexicoIT and MexicoFirst are two strategic initiatives soundly backed by the federal government as well as industry consortia to ensure the viability and competitiveness of the technology industry. These endeavors are part of the reason that Gartner analysts have named Mexico as one of the world’s five leading outsourcing countries.

• Industry strength. How many software companies have a lasting presence in the country, and are they providing products and services to U.S. clients from there? This would be a good indicator that the country has a large, highly qualified population of software engineers and high tech professionals.

• Cultural affinity. As we hear from clients over and over, this is one of the most overlooked aspects of working with an outsource development provider. From scope negotiations and initial ramp-up, to ongoing communications, and every time a new team member joins, cultural affinity is as crucial as good technical and language skills. By talking to people and by listening to social media, industry forums, and other resources, you should get a good impression if the country’s high tech workers understand your business culture, environment, and values.

• Hidden costs. In addition to contract expenses, how much can you expect to spend on telephone charges, connectivity, travel, and time needed to connect with the outsource provider? How will time zone differences add to the cost? Are there labor laws that have a bearing on expenses or that impose certain restrictions on your ability to work with the vendor’s employees?

Understanding the strengths of different areas

When you have identified a country you are comfortable with, it’s time to find out more about certain regions and their strengths and resources.

• Technology expertise. In Mexico as well as in other countries, some areas are very strong in application areas such as aerospace, embedded software, or mobility, or in technologies such as Java, PHP, or .NET. This does not mean that there aren’t developers and tech leads with all kinds of skills, in almost any location. But it helps if you can find a vendor with access to a lively community of professionals in the disciplines and with the skills that are important to you.

• Universities and graduate programs. Reviewing educational resources and their results can give you a good sense of the long-term viability and strength of high tech and the software development industry in a certain area. How many universities in a certain area furnish students with the degrees and qualifications that play a role in your business, and how many students graduate every year? What does the projection for the next five or ten years look like? How well do the educational institutions grow and promote their technology programs?

• Demographics. You want to make sure that your vendor can assemble a team for your nearshore development quickly and get them working effectively after a brief ramp-up period. For that, the areas demographics make a difference. In the areas of the country you consider, roughly how many people will have the degrees, certifications, and expertise you require? Do people stay in the area after they graduate with a technical degree, or do they tend to move? Which international or national technology companies provide employment in the area? Is the area’s technology industry stable, or is there a lot of flux with companies coming and going and people having to transition jobs? To what extent are software engineers and tech leads in the area familiar with U.S.-based companies that employ them or which they support as clients?

Comparing nearshore development providers

When you feel comfortable with a certain country and area, it’s time to consider individual nearshore providers. Outside of comparing costs, how do you most effectively select a vendor from a field where many companies may sound alike at a surface level? Here are some pointers:

• Expertise. You want to make sure the vendor’s employees have the technical and industry skills and expertise that would enable them to perform the work you need done. Have they successfully worked for companies that are similar to yours, or done projects that are comparable to what you have in mind? Will they let you speak to any of their past or current clients? When you have those conversations, you also want to ask about how the vendor’s employees set goals, resolve issues, and communicate with their clients, and how well they fit with the client organization in terms of cultural affinity and work style. At Tiempo, we sometimes invite prospective clients to daily or weekly meetings of our teams with a client they serve, so they can see how we work.

• Stability. How long has the nearshore vendor been in business? Has the company grown steadily, or has it undergone ups and downs, with layoffs and losses of client accounts? Can you verify how long current clients have been working with the vendor?

• Process. Individuals write software, but what is the nearshore vendor’s methodology to enable a developer team to deliver large, complicated deliverables at the level of quality and performance a client expects? How well do they document their processes and commitments, and what steps to they take to make the success of their client engagements predictable and repeatable? Is the vendor open to adjusting processes to fit your requirements?

• Infrastructure. Take a look at the nearshore vendor’s business location and resources. Is the computer network solid, with good security and strong data protection? How will employees connect with your network? Do they have the tools and resources to be effective? And, also important: If you ever need to resolve a fundamental issue with this vendor or even think about taking them to court, do they have an office or even a headquarters location in the U.S., where you can reach local professionals familiar with U.S. laws and regulations, who can assist you if all else fails?

• Talent management. Ideally, you want your nearshore development performed by people who enjoy their work, know you well, and are strongly motivated to excel. From high-quality workplaces to sweatshops, the variety of people and talent management in the nearshore industry is substantial. Find out if a vendor considers recruiting and talent development as strategic, or do they simply hire as many skilled people as they need per project? Do they provide employees with professional development, training, incentives, and competitive pay and benefits? How do they manage attrition and turnover, and can you get a sense of why people leave the company when they do?

Once you have satisfactory answers to your questions, you are probably close to choosing a nearshore vendor can be a good fit. If you would like more guidance, or want to discuss what nearshore development by Tiempo might look like, we should talk. We certainly have a strong success record of transitioning clients to our nearshore services and meeting their goals. Please send me a note to mbernal@tiempodevelopment.com, or connect with Tiempo Development at ;contact@tiempodevelopment.com.