Table of Content
- Nearshore vs Offshore Evaluation Criteria
- Sourcing for Suppliers
- Nearshore vs Offshore Contractors Trustworthy
- Cultural Differences
- Mexico vs India
- Time zone and Proximity
- Nearshoring Agile Development
- Nearshoring Teams
- Nearshore vs Offshore Costs
Outsourcing software development helps enterprises to gain operational performance and innovation speed. Scaling operations with speed while driving costs down is imperative to stay at the cutting edge. Outsourcing software development can give you agility, speed, and perfect execution. Companies evaluate nearshore vs offshore locations to find a software outsourcing partner to build digital products and find new teams to diversify the sources of its advantages.
- Increase your company’s competitive defenses by expanding your capabilities and adaptability with a software outsourcing partner and exploring other software delivery models.
- Build strength and improve performance by scaling up your software operations by adding new tactics, teams, and know-how.
Companies competing in the digital economy looking to outsource software development must outweigh the nearshore vs. offshore advantages and disadvantages.
Nearshore vs Offshore Evaluation Criteria
Nearshore vs Offshore decisions are balanced according to the customer’s evaluation criteria, the type of product, company capabilities, teams and skillset, budget, and most importantly, the quality of products you want to develop. The nearshore or offshore model is determined by your goals, technical fit, risks, level of service, and how your in-house teams integrate with the new teams.
In economic terms, you have probably heard of the saying “you get what you pay for,” which can be applied when outsourcing software development. However, rates are not everything; you must consider productivity, code quality, testing services, production time, and after-sales services.
Sourcing for Suppliers
Setting up an office in a foreign country near or far away is only feasible for some corporations. Others outsource software development by hiring a team directly or a third-party development company. But there are many types of contractors for outsourcing software.
A low-price contractor may not have the teams ready and run to recruit developers once they get your contract. But these developers probably have never worked together or don’t have enough experience. So, it could be less expensive but low quality, have higher attrition rates or have a weak infrastructure.
Other suppliers may have teams organized in a software development centre, but they may not have the skills, are not sufficiently committed, or have other weaknesses. For example, developers in India are known to be highly skilled and prefer to work for large companies, but their rates are not low and are not readily available.
It is advisable to get references from other clients to verify the supplier’s integrity or visit them in person to discuss your plans before embarking on a relationship (consider travel costs).
Nearshore vs Offshore
The best option for US corporations is to outsource software development by contracting with a company with headquarters or operations in the USA and development centers in the nearshore or offshore country. Negotiations and contracts signed in the USA might prove more trustworthy.
An offshore or nearshoring partner with development operations should provide teams ready or build new teams to start a project. A partner with a local office and management can retain talent and give stability and sustainability to the relationship.
When you source for suppliers in faraway locations such as India or China, the culture is very different from western culture. As a result, your negotiation approach might not turn out the best results. When evaluating nearshore vs offshore opportunities, this is the first thing to look at, how easy or difficult it is to do business in that country. The software buyer may have a different interpretation of the meaning of quality, level of responsibility, ethics, or other business customs.
Mexico vs India
The nearshore vs offshore comparisons should also be made more specific for countries or locations. So, for example, if you are in the USA, nearshoring would naturally be to Mexico or Canada. But if you are in Western Europe, then nearshoring would be Portugal, Ukraine, or Poland. So, for our discussion, when we talk about nearshore vs offshore, we will be referring to Mexico vs India or China.
Time zone and Proximity
One major aspect of nearshore vs offshore decisions is time zone and proximity considerations. This aspect is critical when working with India because early morning or late afternoon meetings are not popular with dev teams. In addition, the time zone difference is an obstacle when the project requires a lot of information exchange, making communication in real-time very difficult. On the other hand, teams in Mexico have the same time zone and can work throughout the day with your in-house teams. Also, traveling from the US to Mexico can be accomplished quickly and inexpensively compared to India.
Nearshoring Agile Development
Nearshoring to Mexico is more suitable for the agile development process or projects that require high interaction as you can gain higher collaboration and communication due to proximity.
You can benefit from lower costs by developing a dedicated development team in Mexico with a US-based partner. Your nearshore partner can provide managed services to create a specific application by handling recruitment, team management, project management, and administration.
Your project can be scaled quickly also by evaluating your team and adding developers with the required technical skills as extensions of in-house teams (staff augmentation). Nearshoring software development services offer engagement options such as dedicated teams, staff augmentation, and scope-based (fixed costs, time and materials).
You can have immediate access to talented individuals with specific skills for projects managed by the nearshore partner or by you at their facilities. This is a solution for situations when recruitment takes a long time, or it’s hard to find the skill set required.
Other companies provide hiring or staff augmentation services that match candidates in exchange for fees. On the other hand, a nearshore partner’s goal is to deliver the final product, so it can appoint developers with a proven track record to work on your projects. Teams working with a nearshore partner’s development center ensure security and data privacy.
Nearshore vs Offshore Costs
When comparing nearshore vs offshore for managing teams and projects, there are hidden costs associated with offshoring. Consider your labor costs and manage remote teams, infrastructure, and services. Nearshoring to Mexico has advantages as the government promotes the IT industry services and has modern data privacy and protection laws. When comparing nearshore vs offshore for managing teams and projects, there are hidden costs associated with offshoring. For example, your in-house might get tired of travelling or working in the evenings or early mornings, taking the time from their families. Explore the cost and benefits of nearshore vs offshore models with our business specialist.
Where do you go next?
Think about your company’s strategies for building and increasing competitive strength:
- How will these software delivery models impact your strength?
- How to adapt to nearshoring your business to defend your position over time?
- Do you need to adapt your core business to a nearshoring development model?