Nearshore Software Development: The Growing Trend During Covid Crisis
The past half year has felt unreal in many senses of the word. The brunt of a true global pandemic is not something that any of us have felt in our lifetimes, leaving the ensuing events to confront us with an unnerving precedent: our lives are not as stable as we thought. Structures and institutions we’ve taken for granted our entire lives have been cut off from us, and were it not for the wonders of the internet we’d be so much more isolated than many could bear.
As critically and universally traumatizing this has been, it’s also revealed some fascinating aspects about how the world can and should work. Indeed, every industry has been monumentally affected by the consequences of the Covid crisis to their very cores, shaking core infrastructure tenements and halting growth projects all over the world. As a result, businesses have had to shift priorities from revenue increase to business continuity and customer satisfaction with a newfound vigor.
It’s very plainly harder to concretely, safely, and responsibly enforce a workforce to occupy close quarters for the sake of doing business. It’s a danger to the public health to rashly expect full close quarters business work. Other sources have had to be found and approached. Outsourcing software development has always been popular, but the different models are changing priorities across the world (onshore, offshore, nearshore).
According to the International Data Corporation (IDC), growth in global IT spending is expected to reduce by 3-4% by the end of 2020, considering a “Pessimistic Scenario” due to the outbreak of the Coronavirus (COVID-19) pandemic, as per IDC Worldwide Black Book Live Edition, February 2020.
We weren’t prepared for something like this. Now that it’s here, IT vendors have adapted as best they could to their new environment, and in the process discovering new advances that have shown very optimistic results. Some IT vendors have been dealing with processes they wished they had automated before all this hit. Crisis as it may be, it’s been an eye opener.
Why is Nearshore Software Development A Growing Trend?
The inability to resume status quo business practices have made IT vendors cut their teeth on some new textures. If you can’t conduct your affairs as you normally could, what can you do to make up for the sudden shock to income, productivity, and ROI? IT vendors have been forced to test their resilience on business continuity, remote connectivity, and security as they look at innovative ways to service their clients.
Thinking holistically, the IT field is one of the reigning markets for the globe’s current makeup. There is no easier way to connect as a community than through the power of technology, and technology is where IT vendors are at their most capable. It’s all in the job, after all. Enterprises are looking at IT vendors to help them survive and move forward in times of crisis, because who’s better to pull you out of the muck?
Some outsourcing models around the world are being affected more than others, with some dealing with travel restrictions for their staff, plus not being prepared for this eventuality. Being caught so coldly with their pants down means not having the equipment, infrastructure, or management tools to send their workforce home and thus leaving a lot of companies with no resources to finish projects in time.
Any interruption to the workplace has tremendous ripples in the long-term functionality of the whole. With so much focus being pulled to the belief that a centralized workforce is best for business, being deprived of that system means tremendous losses. Ergo, the lesson learned here is that the traditional business models can no longer be relied on - projects, teams, and remote work needs to be broadened.
After COVID-19, there are bigger strategic and operational risks that require a fully balanced approach. That is why some companies are choosing to fulfill operational needs by outsourcing their software development to nearshore locations, to fill in the gaps where their infrastructure is lacking and promote much needed productivity and a return to normalization.
1. Remote Efficiency Is in Nearshore’s DNA
According to a Gartner report, 54% of Indian companies were not ready to shift to remote work, lacking enough technology and resources for employees to work from home. Offshore outsourcing locations in virtually any overseas country faces a similar issue, much in the same way that the United States was: a disproportionate challenge to adapt to remote work. The infrastructure was simply not there for it.
This isn’t the case with nearshore IT service providers. The prospect of working from home, complete with all the scheduling, technology, and communication it requires to function properly, has long been an essential practice for them. The new remote normal was not new for nearshore providers, meaning there was scarcely any need for adaptation.
Collaboration is crucial for any project’s success. Nearshore excels in creating relationships without the physical presence. By definition, the teamwork between local and nearshore teams on any given project could only be adequately communicated with through remote means: e-mails, chatrooms, video conference calls, whatever fits the ticket.
Nearshore companies have succeeded in quickly and swiftly switching delivery teams to remote working, which was possible due to already extant practices. This ensures that projects keep running without the need of being trained to work efficiently remotely, because clients have been remote all along.
2. Reduced Costs with Reduced Risks
The mass remote working reality will have a lasting impact on the preferences of companies looking to outsource digital innovation. The majority of outsourcing work is primarily sourced overseas, as offshore outsourcing is the tried and proven methodology for decades at this point. Cracks are beginning to show, however, as companies need to adjust their methods to suit the times. There will be a shift from having widely distributed teams all over the world, which is time consuming and costly, driven by a need to reduce cost and limit risk exposure.
Now, onshore solutions certainly eliminate any cultural or linguistic misunderstanding, while remaining close to home and maintaining easy communication, but onshore outsourcing companies aren’t cheap. Out of any of the three options, onshore options cost more and must be drawn from a labor pool that is rapidly shrinking within the United States. As it is, the crisis is forcing companies to look for less costly solutions in order to stay in business.
US based companies outsourcing to onshore service providers have needed to look for more affordable partnerships without sacrificing efficiency and quality. If the reputation you’ve created and built for your company is ruined because the people you hired can’t deliver, then outsourcing would be a net negative for business continuity.
That leaves the third option: nearshore. Nearshore provides a cost-effective solution while also reducing the risks that come with outsourcing to far-off locations such as Asia and Eastern Europe. Although offshore prices can’t be beaten, the overall formula of nearshore success proves far superior results. The keyword here is cost effectiveness: nearshore costs less than onshore while providing better quality results than offshore. Take a look at this article for a more in depth look on nearshore cost competitiveness.
3. Same Time Zones
One of the biggest detractors for choosing offshore outsourcing companies to handle your projects is the time delay. Their work schedules don’t line up with American hours, offset by anywhere between 8 to 12 hours by comparison. This impedes communication tremendously, resulting in days of time passing before issues can be sufficiently and conclusively addressed.
So long as you stay within your own time zones you won’t have to deal with this issue. Working with nearshore companies means you don’t have to worry about your project’s requirements being worked overnight. With nearshore you can send new ideas to your extended team and have real-time, agile exchanges via your communication tool of choice, all done through shared languages and ready to come up with solutions.
4. Cultural Alignment and Efficient Collaboration
Cultural alignment is key to effective collaboration and problem solving. Collectively, those nations who share a continent tend to bear similar working cultures. This involves sharing priorities, ethics, business professionalism, schedules, and fundamental communication within the realm of daily contact. While there’s nothing stopping a Western country from collaborating with a European or Asian country, there’s bound to be dissonance that impacts the work.
There are only two countries that share a common border with the USA: Canada and Mexico. These close connections have led to historically prosperous partnerships, as well as leading the way to ground-breaking charters like the USMCA that incentivizes collaboration between our nations. Our proximity, due to migration and influence between countries, means cultural alignment.
However, Mexico has characteristics that Canada doesn’t, specifically a powerful and rapidly growing presence within the global IT sphere. This, combined with a shared familiarity of common languages and the lifestyles of US companies, Mexico handedly beats out Canada per IT nearshore outsourcing. This translates into a smooth business cooperation and financial synergy.
5. No Language Barrier = No Delays Due to Miscommunication
Like we’ve already made clear, a partnership without the existence of a language barrier is instrumental in developing cohesive and effective collaboration. For instance, with any offshore company that is based somewhere where English is not primarily spoken, translators may be involved as a middleman for negotiations. That can be difficult.
In 1978, President Jimmy Carter visited Poland to deliver a few speeches on a diplomatic mission. Since he was speaking to a large gathering of non-English speaking citizens, the State Department hired a translator to relay his message. This resulted in one of the funniest political snafus where the President was mistranslated to saying that he was abandoning America and wanted the Polish people carnally.
Funny, but disastrous. Misreading or misunderstanding a message can result in horrendous misinterpretation and money losses. You may need to redo the same process over and over if things are not clear from the get-go. Sharing the same language is key in any business partnership. Leave no risk for your translator to say something embarrassing, you know?
Things are different and they’re never going to be quite like the way the world was six months ago. As for businesses, the rush to accommodate new working processes and conditions has left massive holes in our understanding of how to effectively respond to crises like the one we’re currently in. It has also shown to highlight those who were prepared against those who weren’t. Call it a hard lesson learned.
The massive shift toward nearshore outsourcing development is already underway in response to these new parameters. As for why this change has come about, the reasons boil down to five:
- Nearshore companies have already long been utilizing remote work, meaning they haven’t needed to scramble like the States have when Covid hit.
- They’re safer alternatives to either offshore or onshore outsourcing options while simultaneously costing proportionately less money per work quality.
- Same time zones increase the ease and efficiency of communication, as being able to contact your extended teams during work hours generates quicker solutions and increased productivity.
- Cultural alignment ensures that all companies involved share priorities, ethics, business professionalism, schedules, and fundamental communication. It makes collaboration easier.
- No language barrier means no margin for mistranslation or misunderstanding. Don’t want to risk having a Jimmy Carter Poland situation.
The biggest challenges of this crisis for businesses will be to survive. It’s scary right now, for individuals and companies alike, and the strain of change hasn’t been easy on anyone. However, once the crisis is over, there will be a bigger demand for outsourcing services, and you need to be informed and prepared to meet it. iTexico has the expertise to help you with that. To learn more, visit our contact page and schedule an appointment with our professionals today.