Same time zone: The tip of the iceberg of Nearshore

Although we are gradually emerging from the economical crisis, companies are constantly looking for ways to reduce costs. When I speak of these cuts, is not only related to the financial cost but also the challenges of working with teams that are behind schedule.

When people think of “Outsourcing Software Development” the first thing that comes to mind is India. However, in recent years India has begun losing its competitive advantage compared to other countries. While the cost of labor is not as cheap as it used to be, the current geopolitical climates and the difficulties caused by time zone differences are the main concerns of American executives.

Meanwhile, Latin America is improving its position as an Outsourcing Hub. American companies are starting to look in countries such as Mexico, Brazil, Costa Rica, etc. and happily discovering the importance of working in the same time zone, the excellent quality assurance, and vast knowledge about software development.
Latin America countries, such as Mexico are developing expertise not only in software development but also in cutting-edge methodologies such as Agile and Software-as-a-Service (SaaS) application development.

According to the article “Offshore outsourcing: The Nearshore Advantage begins with Business Hours”, companies outsourcing to Latin America said that the main reason of why they prefer nearshore IT outsourcing is the time convenience.

Mexico has a huge advantage as it’s +/- 2 hrs difference with US makes for easier communication and collaboration.

As many IT executives have found over the years, outsourcing software development to teams across a 12 to 24 hour time difference is extremely difficult and generally results in a massive decrease in productivity. These kinds of projects require constant communications, in a way that problems can be corrected proactive.

Outsourcing software development to a Nearshore location is like having a branch office in other state in a different country, resulting in comfortable communications with people who speak good English and understand your thoughts and needs.

Nearshoring Software Development Makes Sense for SMBs

It appears the world is on the cusp of overcoming the worst crisis in recent history. As part of the recovery most companies will seek ways to reduce risks and costs while achieving more with less. For some software companies, outsourcing may be a great opportunity to achieve all objectives.

Most are familiar with the standard alternatives: offsite and offshore. Nearshore has recently been added to the mix. Since offsite is completed in the same country, it’s almost the same cost as onsite.

Then, we have offshore as an option. The difference time zone and the overhead caused for this model make more difficult to manage the resources and the work outsourced. Furthermore, the strains on communication make offshoring less desirable. Over the years software development has moved offshore, but we have also seen it has not worked for everyone.

As I mentioned in the last article, the utopian ideal of the offshore model can only be realized by some large enterprises. So what about small and medium businesses? For them, nearshore could be the solution.

The nearshore model offers an infrastructure that guarantee seamless and virtually uninterrupted communications; a share business culture and a similar time zone (+/- 2 hrs).

Why are nearshore software development advantages so important in the quality of IT services? Clearly, the time and money savings are essential for the success of an outsourced project, but the risks associated with offshoring are reduced through closer proximity, more similar cultures, and a greater overlap of business hours.

Pekka Huttunen, Director of Accenture recently was quoted saying "The primary driver of this shift is not so much labor as it is growing markets and the need to reduce risk by building and buying in multiple locations." He continues, “some companies not only see the economic but also the moral value in keeping software production close – like inshoring or Nearshoring-“.