The business landscape is constantly evolving, especially with the concept of outsourcing and offshore development gaining significant traction. And why not of labor shortages? In today’s times, it is easy to get access to skilled developers in comparison to recruiting them all. So, conducting offshore development projects or outsourcing has become a vital strategy for any and every business to survive, irrespective of their size or industry vertical. Above all these benefits, you are bound to receive an instant gain over the competition in no time.

To be honest, offshoring and outsourcing altogether is a huge concept; it cannot be described with a 2000-word post, so we won’t be able to cover it all. As the name suggests, the following post highly focuses on nearshore outsourcing, how to reap its benefits, and make the most of it in no time. You see, there are times when non-techie businessmen have heard about these buzzing terms and simply get carried away. However, not every evolving concept is meant for you to succeed; sometimes, your choice can backfire. So, instead of making any random choices, it is advisable to get a bit into the nitty-gritty of the concept and then make a decision. Fret not, we have got you covered. The following post breaks down everything, especially in regards to nearshore outsourcing. From what it is all about, to how the concept is beneficial, and what challenges you might face sooner or later, and of course, how to deal with them. So are you ready to dive in!

Nearshore Outsourcing

As the name implies, it is one of the most common yet crucial models of outsourcing. Here, tech-related requirements are usually performed by third-party service providers who reside in the adjacent countries. Nearshore is usually preferred when you want to hire providers who share a similar time zone and culture. However, it is pretty different from offshore outsourcing, which is when providers are located in distant countries where there is a severe issue regarding time and cultural differences. One of the core reasons to consider nearshore outsourcing is when the business wants to make the most of geographical proximity.

So, nearshoring outsourcing is when companies get to outsource services to tech companies residing in a nearby country or region, as simple as that! For example, if you are residing in the US, asking for assistance from remote workers residing in Latin America would be highly considered as nearshoring. Apart from that, you can even think of nearshoring software development to Mexico or Costa Rica rather than choosing a more distant country such as India or China.

Mexico, Brazil, and Argentina can be popular locations to conduct successful nearshore outsourcing projects due to or focourse easy proximity, highly skilled talent, and lower labour costs, in comparison to other alternatives in the US. Also, much like India and the Philippines, these are ideal places that can offer you any type of professional you need, be it a developer or a digital marketing expert.

Nearshoring vs. Onshoring vs. Offshoring

Nearshore I have already covered above, now it's time to consider onshore and offshore. Well, these concepts, as the name implies, are different types of outsourcing strategies where onshore means hiring workers within the same country, and offshoring means hiring workers from distant countries with different time zones and don’t align in terms of culture as well.

Another significant difference to consider here is that offshore is usually cost-effective in comparison to other models. However, at the same time, it often leads to communication difficulties, especially due to time zones and cultural differences. If all this is a major concern for you as well, nearshore is the ultimate choice to make, where you get the best of everything, time zone compatibility, cultural similarities, and lower travel costs.

Top Undeniable Benefits of Nearshore Outsourcing

1. Proximity and Time-Zone Alignment

Physical proximity is a must and pretty much beneficial, especially when outsourcing a development project. You see, you can’t give away your future in the hands of an unknown third party, so it is advisable to conduct on-site visits, face-to-face meetings, and training sessions from time to time. Wondering why? Simple, to establish real-time interactions. Scheduling meetings every now and then or promptly addressing concerns becomes much easier and better.

All this surely results in faster feedback cycles, smoother project execution, and accelerated time-to-market. Can you tell me how much the time difference is between Washington, DC, and Buenos Aires, located in Argentina? Well, this probably means you have a solid seven-hour window, especially so you can communicate seamlessly. Similarly, if your company is located in Spain, then consider opting for nearshore outsourcing in Portugal. Here, smooth, real-time communication is given!

2. Better management opportunities

When you have an outsourcing team that is located nearby, you get to have a hawk's eye over your existing projects. You get to even talk more in person than over apps such as Skype, Trello, etc. Moreover, here you get to keep tabs on the ongoing progress, and project management can be done in a better way, since everyone is working on the same page. Lots and lots of time and effort can be saved here.

3. Cost savings

Next is cost savings, now who doesn’t like to save money and yet receive the best possible outcome? We all do, don’t we! Well, nearshore outsourcing does provide you an opportunity to save ample of money in comparison to hiring development talent from your own country. Wondering how? Here’s the answer.

Let’s say the average salary of a software developer working in Mexico is USD 45.85 per hour, whereas in the US, you are most likely to find USD 51.29 per hour. Similarly, the average cost of living in a Latin American country such as Costa Rica is more than 30% lower than in the United States. So, in simple words, you are bound to get more work done in the same software development budget in South America compared to North America.

However, I am not saying at all that the cost of nearshore outsourcing is the lowest; offshore is, but the overall ROI turns out to be pretty much equivalent.

4. Similar Cultures and English Proficiency

Since nearshore outsourcing ensures similar culture and language, you are bound to match each other’s working styles as well as languages. No scope for any kind of cultural barriers or conflicts. Chances are pretty high that you share the same national holidays, setting proper deadlines in prior.

5. Access to a special skill set

You are bound to tap into a large pool of highly skilled and talented workers, especially those who are working further away from your own country. Latin America has the largest pool of talented and skilled professionals. So, meeting multiple deliverables, scaling up and down of the team, is highly possible here without affecting the budget.

Key Challenges To Consider

Of course, whether you opt for in-house or offshore or nearshore companies, you are bound to face some potential difficulties, some of which are mentioned below.

1. Compliance

One of the obvious challenges to address is compliance. Since you are hiring from a nearby country, sometimes it can be extremely difficult to comply with that particular country’s laws and regulations.

I mean, this is pretty obvious that every company has its own set of rules and regulations, labor codes, which any business should be able to comply with. Failing in this segment can have insane repercussions and legal consequences such as fines, penalties, and legal disputes.

2. Is the competency verified?

The next challenge to address is to verify the skills and competencies of the chosen nearshore development company. This is a must if you have chosen a company with different educational and professional qualifications. By doing so, you will be able to find out whether they are fit for your needs or not.

However, don’t be rigid here, try being a bit flexible, you see, certain skills can be managed. Also, here it is advisable to develop effective strategies and systems so that everyone on board is able to play or perform their roles seamlessly.

You basically need to develop some of the most effective strategies as well as systems and address these basic yet critical challenges, or else nothing will go in sync, and the situation might even get worse after a period of time.

3. Communication barriers

The next challenge that must be taken care of is communication and language barriers. Of course, there are cultural similarities, but it certainly doesn’t mean there won’t be any kind of language difference or language barrier, which can result in a large amount of misinterpretations. So as a solution, what you need to make sure of is, establish proper communication protocols, which can help in mitigating these issues in no time.

4. Choosing the right candidate

Every company has its very own process of hiring or recruiting candidates; however, this might not be sufficient for hiring professionals, especially with nearshore outsourcing. Here, you need to conduct a well-thought-out screening process, so you need to screen for English as well as all the tech-related tasks, and then jump to the conclusion. Also, unlike in-house, nearshore hiring might take a bit more time to review.

So these are some of the most common challenges faced by businesses when it comes to hiring nearshore outsourcing. However, on a personal level, I feel that these challenges aren’t sufficient to stop anyone from making the most of this concept.

How to make the Nearshore Development Project a Grand Success?

1. Evaluate the business needs

The first and foremost step in the nearshoring process is to successfully evaluate the business needs. Unfortunately, not many of you have this idea of where to begin. Decide on what particular aspects of the business need to be outsourced. Try identifying these needs and make sure everything revolves around your core operations so that there are no disruptions.

Step 1 - Access all the business objectives

• Cost savings and high efficiency
• Identify core business functions
• Access to specialised skills and expertise
• Increased operational flexibility
• Improved time-to-market

Step 2 - Identify your core and non-core business functions
Try delving more, identify what the business is best known for and what activities can drive primary revenue, and lastly, what tasks can be taken care of by outside experts. So basically, here you will learn about which areas are supposed to be considered when it comes to outsourcing.

Step 3 - Perform cost-benefit analysis
Outsourcing highly thoughtfully requires the allocation of resources. Which is why conducting a cost-benefit analysis is important. You can simply begin by comparing all the expenses, especially ones associated with all the tasks in-house, in comparison to how they are handled. There are a few things that must be considered, such as:

• Direct and indirect costs - Employee salaries, office spaces, operational maintenance.
• Intangible costs - Contract setup fees, Training, and additional unexpected expenditures
• Opportunity costs
• Risks

Weighing all these factors can offer a clear understanding of business needs.

2. Choosing the right nearshore location

Another sure-shot way to conduct a successful nearshore development project is by choosing the right nearshore location, which is possible by considering factors such as evaluating talent, time zone alignment, cultural compatibility, regulatory obligations, and more. Make sure to pick strong industry-specific expertise.

3. Looking around for a reliable nearshore partner

Choosing a trustworthy tech partner is a must! Fortunately, there are many platforms available, such as LinkedIn, social media, which can offer valuable insights into a company’s reputation and industry presence. Also, consider all the testimonials, case studies, and more.

4. Negotiating well and service-level agreements

Once you have made the choice, time to negotiate well. Also, begin by clearly defining expectations and deliverables via well-structured contracts and SLAs.

Also, make sure to set relevant performance metrics to keep a hawk's eye on the nearshore partner’s output. Try considering uptime (service availability), response times (how quickly your provider addresses customer needs), and service levels (a measure of how many agreed-upon goals are met). Also, do not forget to discuss pricing models and payment terms well in advance.

5. Onboarding

It is very important to conduct a successful onboarding, where you try to establish all effective communication channels and make sure everything is fine between your employees and nearshore team members. Always try to evaluate your partnership to succeed in the long run. After all, it requires ongoing innovation, adaptation, and high optimisation to remain highly competitive.

Conclusion

Outsourcing altogether is a good start, just make sure you pick the right path that matches what your company is exactly looking for. So if you want to streamline operations, save money, and collaborate better, time to consider nearshore outsourcing. Give it a try once and see if it clicks with your evolving needs.

On and all, nearshore tech partners can be considered as working with extended neighbors, especially to take care of all the behind-the-scenes tasks. What’s more to ask for? It is the smartest way to stay ahead in the fast-paced world.

I hope you did find the following post worth taking into account. In case if you have any doubts or queries, feel free to mention them in the comment section below. It would be great if you could share the following post with your peers and help us reach more audiences. Also, keep watching the space to know more regarding the same. Good luck with your upcoming development project!