September 27, 2024
The value of outsourcing as an effective strategy for software development is generally well understood. As far back as 2013, it was reported the 2 out of 5 CIOs surveyed planned some sort of outsourced software development for the coming year. In this article, Accelerance would like to help you understand better the benefits of NEARSHORE programming.
Want to know more about the benefits of outsourcing in general? Read More
What is NEARSHORE software development? How is it different than outsourcing (or is it)?
- Outsourcing is using a 3rd party (person or company) to perform work, or software development, for example, you might have previously accomplished by using your company employees.
- INSHORE means you are outsourcing to a 3rd party in the same country as you.
- Therefore, OFFSHORE simply means outsourcing to a 3rd party in another country. The top 3 outsourcing countries are India, China, and Malaysia. In fact, 5 of the top 10 outsourcing countries for IT are in Asia.
- DUALSHORE outsourcing is simply a hybrid. Usually, a liaison or account manager, will be in the US and the software development team will be located in another country.
- NEARSHORE outsourcing is an underutilized outsourcing option in which the third party is located in a neighboring country. For US companies, a NEARSHORE outsourcing provider would be located in North or South America.
NEARSHORE programming offers unique benefits over offshore programming and is an attractive option for North American companies looking to outsource software development. Latin America is an especially attractive NEARSHORE option.
From a macroeconomic perspective, The investment community has a positive outlook on Latin American business. A recent study compiled by Ernst and Young in Private Equity Roundup Latin America, confirms that private equity and venture-capital investments remain committed to Latin America. Many investments target small and medium enterprises (SMEs), with about 90% in Mexico and Colombia. Managers are increasingly confident in Latin America as an outsourcing hub, and software outsourcing there has surged, with Mexico and Central and South American countries joining in.
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Benefit #1: Lower Rates |
The attraction of lower programming rates, compared to the US continues to be a key reason that companies explore offshore outsourcing for software development. Certainly, NEARSHORE outsourcing provides this savings opportunity as well. NEARSHORE providers in the Americas offer skilled programmers at lower hourly rates than in the US. Why are the rates better?
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Benefit #2: Shared Time Zones |
In traditional offshore outsourcing, many US companies have faced challenges in working effectively with an Asian software development company because of the time zone differences. In a recent survey one-third of US companies that outsourced to India considered the 10-hour (or more) time difference to be a big challenge. The "core team" in an outsourcing provider often works hours opposite to US business hours, which can hinder effectiveness if not managed well and make timely collaboration problematic.
NEARSHORE outsourcing programmers work in the same time zones as your company, enabling high collaboration crucial for Agile and Scrum. Face-to-face meetings are easier, and US managers are more likely to travel to Latin or South America than to Asia, as it often requires less travel time than a cross-country US trip.
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Benefit #3: Few Language & Cultural Barriers |
Latin American universities have strong IT programs, producing many software engineers for outsourcing. English is widely spoken, serving as the main business language. These countries share a Western culture with the US, having strong ties in commerce and popular culture. US brands, news, music, and TV are familiar and regularly consumed.
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Benefit #4: Software Outsourcing Advisory |
For more than a decade, Accelerance has recognized the benefits of NEARSHORE outsourcing to US companies. We know that companies who already understand the benefits of outsourced software development see new levels of value using outsourcing, NEARSHORE outsourcing provides new levels of value. For other US companies who had a bad first experience with outsourcing, NEARSHORE outsourcing provides an approach that removes barriers such as language, culture, and work day/time zone differences. |
In Summary
NEARSHORE software development outsourcing is an option that many companies overlook. The typical mindset is “Outsourcing = Asia”. US and Canadian companies have excellent NEARSHORE options. NEARSHORE outsourcing to Latin or South America offers cost savings and skilled teams, with the added benefits of shared language, culture, and time zones.
Accelerance has already investigated and established relationships with certified, vetted software development companies throughout Latin and South American countries including:
- Argentina
- Brazil
- Bolivia
- Colombia
- Costa Rica
- Mexico
- Peru
- Puerto Rico
- Uruguay
- Venezuela
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