Nearshoring software development talent has been growing aggressively for the past 20 years due to its conveniences and the risk-mitigating properties that such a strategy drives. But what is nearshore about and what are its benefits?
Nearshore outsourcing means delegating partial or complete end-to-end projects and assignments to external providers that are located in roughly the same geographical location as the company doing the outsourcing, meaning timezones and cultural perspectives are more likely to be aligned. For example, in the U.S. market, nearshore outsourcing could include sourcing talent in Latin America. In the Western European markets, nearshore talent could be sourced from Eastern Europe.
Now that we’ve clarified what nearshore outsourcing is, here are our insights and perspective on why, now more than ever, nearshoring software development talent is a valid option for any emerging business and why it might even be the option for some.
Why Nearshore is the Answer in Today’s World
When nearshoring IT talent, be it staffing a complete development team for a tech stack, allocating a full agile squad from management to QA, or directly nearshoring the complete design and construction of a digital product or service, what companies are actually hiring is the access to talent with the right mix of knowledge and experience at the exact moment they need it and in the precise proportion that the specific project they’re outsourcing for requires.
While no one hopes for a rainy day when they decide to keep their umbrella close at hand, no company hopes for a recession and inflation when they prepare for one. The inflationary impact that the U.S. economy, and the world as a whole, is experiencing right now requires all of us to review our strategy around cost and efficiency. When we do that, nearshore undeniably shines.
Nearshore Cuts Costs
Now, more than ever, we’re starting to face budgetary constraints, some sectors more aggressively than others. Yet, the whole scenario is calling for an increasingly more conservative and risk-averse approach.
From a cost perspective, nearshore outsourcing has always proven to be a cost saver, as it enables companies to reduce their overhead costs and focus their expenditure on just the right amount of bandwidth for what they require at the time.
This reduction in overhead comes to light when you dissect the hourly rate of a typical nearshore firm. Besides paying a fraction of the hourly rate that an onshore developer would cost in the U.S., the rate paid to a nearshore firm includes overhead costs that are at half the price tag of an onshore developer.
Nearshore Minimizes Risk
If we analyze nearshoring from a risk perspective, it is an excellent mitigation strategy, as there’s a direct link between Capex and Opex.
When a company decides to offshore part of or all of its digital muscle, the decision implies a translation of expenses from Capex to Opex. What previously included a considerable upfront expense for the set up of the different teams (hardware, office space, among others) now becomes an operating expense, or Opex, which translates to an ongoing monthly fee with no need for upfront investment.
If we add this characteristic to the considerably low termination conditions some companies will present, compared to an in-house hired collaborator, it becomes a no-brainer that nearshore is highly convenient when there’s no hunger for risk-taking.
Nearshore is Better for Morale
When weighing a nearshore partner against in-house development, the financial savings are only one of several advantages to be found. While hiring a developer is typically costly, it also requires a level of alignment between the candidates and the organization that is hard to achieve these days.
Despite their best efforts and investments, many organizations are not digitally born, and therefore IT talent may not find these organizations to be a great place to work and, more importantly, to hone their skills.
It’s in this sort of scenario that a nearshore partner would be a great solution. Seeking the right talent at a fraction of the cost and in the time and shape required for the challenges ahead goes from being a near impossible endeavor to a much more accessible one.
Factor in the reality that remote work environments are on the rise and have aligned communication for both in-house and offshore collaborators. This homogenous reach in both scenarios positions nearshore as the even better alternative for organizations that are craving digital.
If we then add these points to the juncture we find ourselves in today, we might start figuring out the reasons why nearshoring IT resources is not only a good option but why nearshore is the option in many cases.
Tekton’s Takeaway: Nearshoring presents a win-win situation for most companies right now
As we have seen so far, despite the global situation, there’s still quite an appetite for digital among leading companies that are seeking to innovate and expand their digital footprint. The decision-making process involved can be particularly challenging when assessing the different strategies available while considering scaling a team or engaging in a complete digital product or service revamp.
Now, we hope, you can see why nearshoring presents a win-win solution for most companies right now. Not only when it comes to considering cultural and timezone alignment, but also when taking into account pricing convenience.
Nearshore offers an on-demand scheme for what can otherwise be highly costly resources, the risk-mitigation properties such a strategy has, and, last but not least, the convenience that today’s remote working environment presents for incorporating remote nearshore collaborators.
What to Consider When Sourcing Nearshore Talent
When thinking of the value proposition of a nearshore firm, the primary focus should rest on two pillars: your clients and your people. Tekton was built upon that very same idea of being a people-oriented company. In that sense, Tekton has always centered our strategy, values, and enthusiasm around nurturing that aim.
That being said, we can speak from experience when we say that when building a value proposition for nearshoring services, it’s important to not only bring the right experience and talent to the table, but also your team must bring a sense of belonging to the project and the client.
This is how we operate at Tekton. This is because we’re sure that at the end of the day, it’s not our tech-savvy that will make us stand out, but our sense of ownership for our client’s endeavors. The same is true for you and your people.
If you think Tekton might be a good fit for your company’s digital roadmap moving forward, you are more than welcome to reach out to us.