Mythbusting: The Seven Untruths About Nearshore IT Development
You’ve undoubtedly heard the oft-repeated nugget about the definition of insanity – about how it’s performing the same wayward actions, over and over again, and expecting a different result.
When iTexico was founded several years ago, its founders believed that there was a more efficient way to provide outsourced services to technology clients than those which existed.
And though more than 100 clients have since embraced the company’s “nearshoring” model of providing outsourced services from Mexico, it was still unclear why so many companies were engaging in the “insanity” of making the choice to offshore to India, or overspend here in the U.S.
When we heard from clients, partners, friends and others in the business community, we noticed a pattern of misconceptions and misinformation. It was surprising how many myths still exist about nearshoring. As such, we have compiled seven of the most pervasive ones here, as well as some “mythbusting” thoughts designed to help you better understand the reality behind the truth.
Myth 1: Offshoring and nearshoring are all the same. Though both share some significant key advantages – capability, capacity, cost-effectiveness and improved delivery process – nearshoring enjoys two unbeatable advantages over the former – enhanced opportunities for collaboration, since resources are located in the same or nearby time zone; and enhanced conveniences due to proximity and cultural alignment.
Myth 2: Only India can really excel at outsourcing. The fact is, great talent can now be found in many countries, including Mexico, where hundreds of thousands of technology graduates matriculate from universities each year. The increased presence of U.S. technology interests has fostered economic growth and successes in the technology sector in Guadalajara and the surrounding areas. This has led to an increasing level of outsourcing maturing in Mexico. Also, talent is mobile – and will relocate for the right reasons.
Myth 3: Nearshore is more expensive than other alternatives. Not only are the hourly pay rates for nearshore talent in alignment with other outsourcing alternatives, but the key benefits – travel, communication, on-site management, collaboration and infrastructure – all cost substantially less in a nearshore scenario. It’s important to remember that most critical value in nearshore resources are in talent, delivery processes, and outcomes. It all adds up in supporting the notion that LATAM countries are extremely cost-effective from an outsourcing perspective.
Myth 4: There simply isn’t a deep pool of talent in Mexico. Untrue. Recent figures published by Neo Group & Supply Wisdom show that Mexico far outpaces other Latin American and Caribbean countries when it comes to overall graduates, and IT (STEM) graduates. (See chart below)
Myth 5: It’s too dangerous to do business in Mexico. Largely the fabrication of movies and TV shows, crime in Mexico has been on the decline for some time. Instances of the most egregious capital crimes are among the lowest in the region – individuals are five times more likely to be the victim of an assault in the U.S.; eight times more likely to be a victim of a kidnapping in Canada; and 100 times more likely to be a victim of rape in South Africa; than in Mexico. As with anywhere in the world, including one’s own hometown, location knowledge, and vigilance, is essential in maintaining personal safety.
Myth 6: 12 hours difference helps round the clock development. Though having resources a half a world away can be beneficial in limited cases, it usually only helps in well-defined or routine projects with long timelines. Most projects need real-time interaction across teams using Agile process, to foster a quicker speed-to-market. Midnight project manager-to-project manager calls simply are not enough. Also, modern communication tools can supplement – but not replace – the value of face-to-face, real-time human interactions.
Myth 7: Nearshore implies a compromise on quality. Any of the old conceits regarding nearshoring have long since been vanquished to the history books. Outsourcing process maturity has improved, and delivery quality is top notch. The migration of major providers to LATAM is a signal that this type of delivery is here to stay. Nearshoring simplifies delivery while adding the kind of value that other types of resource allocation cannot.
Have you considered nearshoring for your IT development?