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 to Mexico: ALL INCLUSIVE

For companies who want to outsource application development services, nearshore represents a viable solution, especially for projects that require tight collaboration. The risk associated with outsourcing is lessened with closer proximity as damage control is just 4 hours away on daily flights from major US cities.

If close proximity and some other advantages that I have presented in the last articles, are not enough to think about Mexico as an alternative to outsource software development, then consider their specialization as another benefit. It would be good to mention some companies that provide complete solutions in a nearshore location; Softtek, Scio Consulting and Sigma Tao represent the wide range of Mexican software providers.

Softtek specializes in software development, Business Process Outsourcing (BPO) solutions, SAP and ERP implemention services; with offices across different states of the Mexican Republic. Scio Consulting provides outsourced product development and IT services for ISVs and businesses with a focus on Software-as-a-Services, Web 2.0 and highly interactive user experiences. They operate a development center in Morelia, just 3 hours from Mexico City and a 4 hour direct flight from Chicago, Seattle, or San Francisco. Sigma Tao, with strengths in business applications written on COBOL, SAP implementations and Geographical Information Systems (GIS) is located in Querétaro, just 2 hours from Mexico City.

These companies not only offer the advantages of the nearshoring application development, they also specialize on specific technologies and industries. Quality in delivered products and daily work is part of the Mexican culture so the overhead associated with management is less and therefore, productivity is higher.

So when you think about outsourcing application development, think beyond offshoring options. Just as Diane Burton -an associate professor of management at MIT's Sloan School of Management- said “It's important that the world knows that it's not just China and India… It is truly a more global phenomenon where there are skilled and talented people around the world who are ready, willing and able to do the kind of work that (represents) good jobs”.

Nearshoring software development to Mexico provides you the ability to collaborate easily and effectively, thus not only a source of inexpensive skilled labor, but also a more convenient and productive way of doing business.. The nearshore operations become more like just another office location rather than a separate unit.

Regardless, each company has different needs. Everyone has to look for the best option that suits their needs, satisfies its demands and helps them to achieve their goals. You need to focus on the goals: becoming more competitive while you satisfy to your costumers to succeed.

Outsourcing

Software Development to Mexico: An Alternative to Profitability and Success

The results of the current economic crisis are clear: millions of people are unemployed and companies are going bankrupt or are struggling to make payroll.

Software companies are not the exception. Some software companies are buckling under pressure of the crisis and are failing. Sales are down, expenses are too high, and more importantly, expenses are fixed.

One of the most recent cases was LucidEra a prominent business intelligence SaaS start-up. LucidEra is struggling to stay afloat. They haven´t ceased operations yet, but the rumors of their imminent closure end are gaining attention.

LucidEra’s CEO said they have happy costumers and a good pipeline, so why are they sinking??

One angle to consider is that some SaaS Companies aren’t leveraging their best resources for application development. They haven´t looked for different and better options.

Many may be leveraging offshore vendors in Asia to reduce costs, but the last 5-10 years has seen a fair share of project and offshoring failures. The challenges of working with resources half a world away with a 12-18 hour time difference have taken their toll.

Perhaps they should consider working with SaaS product development experts in a nearshore location? Outsourcing software development to Mexico can be the ticket to reduced costs and reduced stress for building and maintaining their applications in a cost effective and productive way.

We clearly know cash flow and capital are the primary issues, so why don´t they look a little bit ahead and analyze the options that Mexican software providers give them? Undoubtedly, Mexico can be a “safe harbor” for companies that are suffering financial hardship.

The strategic geographical location, similar time zone, but specially the lower cost of labor makes Mexico an interesting place to outsource software development.

Nowadays, companies need to find and chose the best option to cut costs, while they increase the competitiveness.