For decades, businesses have used offshoring to lower development costs and widen profit margins, but with significant drawbacks. Language barriers, cultural differences and time zone delays have long challenged businesses choosing this model. But nearshore software development offers many of the benefits associated with offshoring, while resolving most of its challenges.
Offshoring is the strategy of sending in-house projects to companies outside of a business’ home country. For example, a retail company based in the United States might send its e-commerce development work to a team of developers in China. In comparison, nearshore software development is offshoring based on geographical proximity.
This work-sourcing model allows businesses to partner with nearshore software development companies in nearby countries. An example would be a retail company in North America deciding to send their e-commerce work to a development team based in Mexico City, or Toronto, Canada. Let’s explore the top 4 benefits of nearshoring.
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Nearshore software development offers a solution to the critical shortage of software developers in the U.S., where it seems as if there are never enough top-tier developers to go around. And the pandemic-driven spike in remote work and ecommerce have only spurred demand for tech talent even higher.
Despite record high compensation offers, the shortage of U.S. tech talent continues. The U.S Bureau of Labor Statistics predicts at least 200,000 developer positions needing to be filled each year through 2030. The Bureau also foresees a 22% increase in demand for software developers in that timespan.
As a result, businesses struggle to meet project goals and complete digital transformation initiatives, putting growth projects on hold and missing market opportunities. How can businesses overcome this shortage of U.S. tech talent to recruit the developers they need?
For many businesses, the answer to the tech shortage is to look just across the geographic borders to seek out pools of untapped tech talent. Developers with comparable skillsets are available in nearby countries with a lower cost of living.
Nearshore software developer companies connect businesses in one country with the talent they need in another country nearby. And thanks to recent advances in remote collaboration tools, it can be almost as easy to work with a team across a border as it is to work with a team across town.
Scheduling meetings, collaborating on projects, and problem-solving in real time are all much more difficult when juggling significant time zone differences.
If at 1pm on a weekday, a business based in New York with a Mumbai-based offshore development team wants to call a meeting to discuss a software fix, they would need to wait several hours. That’s because 1pm in New York would be 11:30pm in Mumbai – far outside normal business hours.
This is where nearshore software development companies shine. They are typically within one to three time zones of the businesses they work with, making collaboration easy and instantaneous. With minimal time zone differences, the work hours of the businesses and its nearshoring partner overlap. Last-minute hiccups can be quickly resolved and new initiatives implemented at short notice.
And if in-person visits need to be arranged, travel is quicker, less expensive, and comes without energy-draining jet lag.
Beyond language barriers, respectfully navigating different cultures can be tricky. Hand gestures, eye contact, and tone of voice can be interpreted differently around the world. It’s easy to unintentionally cause offense and alienate business partners. Even multi-billion dollar corporations aren’t immune to these costly mistakes.
Fortunately, neighboring countries tend to share some cultural overlap, making it easier to communicate clearly and confidently. It’s also likely for there to be a shared language. Throughout North and Central America, for example, there is a high degree of English proficiency, negating the language barrier obstacle. Nearshore software development companies are able to communicate with their clients without the need for translators and with minimal misunderstandings, so projects move quickly.
Working with a nearshore software development partner allows businesses to stretch their development budgets further. Hiring nearshore developer companies saves an average of 55% in talent compansation, as developers in nearby countries contend with a lower cost of living.
Should a business wish to temporarily scale up their development teams for a project, they may not need to expand their own in-house team. Instead, they can supplement with a cost-effective nearshore development partner. This also avoids having to screen individual freelancers, as the nearshoring partner sources the necessary talent and handles the screening and quality assurance.
Businesses also save by not having to expand their own IT infrastructure. They reap the benefits of having a dedicated development team, but without needing to rent office space, pay utilities, and source, ship and maintain their own equipment.
While nearshoring offers a variety of benefits, these are the most compelling reasons to consider working with a nearshore software development company to find the development talent you need.