Outsourcing Development Nearshore: How did we get here?

If you’ve been doing your research on software development outsourcing then you’ve probably heard about outsourcing nearshore. When your partner is a nearshore provider, you’re working with a business in a nearby country, (generally in places like Mexico, Brazil, Costa Rica or Argentina.)

While offshoring development work to countries in Asia, Africa, and Eastern Europe was the trend a decade ago, the needle has moved dramatically, and the business is moving closer to home. Nearshoring is become the best practice for North American businesses looking for a partner with similar hours and a compatible working culture, and the market in Mexico is on fire.

In fact, Gartner Inc. recently ranked Mexican IT at number 3 globally for offshoring options with the tech industry there expanding at 3x the global average.

In addition, we conducted a survey of over 200 US IT Decision Makers, and 17.9% indicated they were currently outsourcing to Mexico. That was higher than any other country in terms of frequency.

Increasing Prevelance of Nearshore Outsourcing Chart

Why is the outsourcing market moving nearshore, and more specifically to Mexico?

Agile is taking over, and it demands constant contact

Heard of Agile Development? Since its start in 2000, agile has quickly become the best practice for most Development teams because of its ability to generate faster results with a higher level of quality. The Agile methodology was started because of disadvantages using the traditional or “Waterfall” development method.

Waterfall software development models can take up to 12 months to implement and see a true Return on Investment. But with Agile’s bite-sized deliverables, developers can enjoy quicker outcomes and rapid profits. In addition, unlike traditional software development, Agile developers can find any issues and bugs and fix them along the way – bug fixes are usually performed concurrently with coding. Testing throughout project development instead of at the end of the project can bring a number of advantages for app developers, supporting them in the discovery of coding flaws or other bugs.

More outsourcing development firms have transitioned from the Waterfall development method to Agile for quicker results and a shorter Time to Market.

How does it work? Agile Development fast-tracks quality software and application development to boost agility and reduce Time to Market. This approach breaks up all the individual steps or pieces of the project or application into smaller functionalities called “stories.”

All of these stories are then organized on a central storyboard for a clear, big picture approach before the team executes the separate functionalities in order of priority.

Agile software development requires development teams and users communicating all the time – that’s virtually impossible when part of your team is on the other side of the world.

The flexibility and constant communication and regular testing makes it challenging to use agile software development techniques if groups of people are not in close contact during working hours. You can’t manage a scrum over thousands of miles. This creates a major problem for companies that are offshoring their development.

Talent is growing closer to home

To really understand why outsourcing is moving closer to home, it is important to understand the differences in development talent available. Up until the last decade, North American businesses have offshored roles with lower salaries and necessary responsibilities to economical locations around the globe, but lately, the trend has changed.

Recently the Deloitte Global Financial Services Group cited concerns around future accessibility to skilled workers in popular offshoring locations like India. The study explains that only 10-15% of Indian college graduates are “considered suitable for direct employment in the offshoring industry.”

The Outsourced Development market is quickly evolving to keep up with the infinite flow of new technologies and constantly increasing user demands. Back in the nineties and early two thousands, most businesses used offshoring for lower-level positions. Now, more of the same businesses also rely on outsourcing for more robust and strategic roles.

More businesses are going nearshore to tap into talent in countries like Mexico, Brazil, Costa Rica, or Argentina. Nearshore is increasing in popularity with American businesses looking to limit spending on overhead and labor.

And the talent is growing closer to home. An average of 130,000 engineers and technicians graduate from Mexican specialized high schools and universities over the last five years. This number has exceeded students graduating in the same areas in Germany, Canada, and even Brazil, which has almost twice the population.

And while higher education is rapidly advancing and becoming more abundant in Mexico, the domestic job market isn’t – leaving more development talent open to nearshore working environments. Engineers in Mexico increased from 1.1 million to just 1.3 million in recent years.

At Tiempo Development we have seen this growth on our team. In fact, we just opened our fourth location.

Ready to talk?

Click here to schedule a meeting with our team to learn how we can partner with you to keep your innovation moving faster, and how you can leverage the advantages of nearshore software development.

About Tiempo Development

Tiempo’s nearshore business model has become hugely successful because we have been able to leverage the talent Mexico is fostering, making software development easier and more affordable. Our Mexico software development teams engineer powerful technologies that align with the goals and strategies of our customers for both their internal and public-facing development initiatives. This proven combination of resources, process, technology knowledge, industry expertise, and strong leadership provides our customers with cost-effective solutions delivered quickly from a pool of highly successful Mexican STEM graduates and experienced engineers. Our technical focus includes Microsoft infrastructure and security such as .NET and MSSQL; Java, LAMP and mobile application development. Find out more about outsourcing software development by contacting Tiempo today.

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