Because of the complicated nature of business tasks like accounting, recruitment, or software development, outsourcing has emerged as a popular business model. One example of outsourcing is nearshore services in Mexico for US companies.
It is well known that hiring and training new software developers in the US is a time-consuming and expensive process. Though one might hire the best person, keeping him/ her motivated is a big challenge.
This is where outsourcing comes into the picture. It is an arrangement where business functions like software development is assigned to a third party that has a team of expert personnel to do the job. This overcomes the obstacles of a shortage of resources and talent to complete the work in-house.
Types Of Outsourcing
There are two kinds of outsourcing: Offshoring and Nearshoring.
Nearshoring is an arrangement in which a hired team is located very near the company’s headquarters. Usually, they are in the same time zone and the same economic union. An example of nearshoring is a US company opting for nearshore outsourcing in Mexico.
As opposed to this, offshoring is a process in which work is outsourced to a third-party service provider located far from the company headquarters. An example of outsourcing is a US company assigning tasks to a company in Vietnam.
Though offshoring has historically offered the best ROI in software development, the gap between the talent of offshore and nearshore companies has been narrowing, making nearshoring an attractive option.
Nearshoring performs simply like offshoring, only that your business joins hands with workers in similar time zones. This makes communication between onsite and offshore teams smooth and effective. Additionally, onsite visits are possible in a faster and more frequent mode. In comparison to offshoring, nearshoring is also less expensive.
Top Benefits Of Nearshoring
Choosing the right outsourcing team for a project for software development within the same economic union implies that the business will face the same kinds of legislation. A nearshoring arrangement will enhance accountability, rendering them a superior choice in comparison to offshore teams.
It is worthwhile to note that international laws can be complicated. Solutions may not be clear, and it may be tougher to pursue modifications if there is a lack of detailed agreement. When you stay within the same legal borders, it provides protection to both the business as well as its outsourcing partner.
Boost To Economies
In case your business is based in the US, it is natural to note that nearshoring partners must be within the bounds of North America. Hence, the first direct benefit of nearshoring is economical.
Because money gets injected into the same trade area, it will circulate within the exclusive region. This fact has advantages for all parties within the same economic union as US and Mexico within NAFTA. Thus, US companies can benefit from nearshore outsourcing in Mexico.
This is a win-win arrangement for all stakeholders. Paying taxes and creating jobs through nearshoring helps boost local economies and ensures that they are also thriving. Since you are paying for a service of high quality, opting for local outsourcing implies gaining value for money.
Common Culture And Values
Will you feel threatened by a totally new work culture in an outsourced company? With nearshoring, such risks are reduced. Many nearshore countries enjoy affable ties with the US. Thanks to the prolific trade and tourism shared by the US and countries like Canada and Mexico, there is mutual familiarity with the culture, language and values of each, reducing chances of barriers.
More Control And Influence
You can stay in control of your business projects thanks to a similar time zone, shared language, and adequate expertise. You can work with developers who can communicate easily with you, be available during your working hours, and are close to you.
Reduction In Costs Of Travel
Not many outsourcing companies can work on their own without face-to-face meetings and interaction with the company that hired them. The need for direct meetings is likely to happen anytime and sending executives across the globe for such meetings can prove to be expensive and tiring. Besides the money spent on travel and accommodation, you will waste money in terms of the poor productivity of exhausted workers.
The great aspect of nearshoring is that most US airports have direct flights to nearshore locations. Instead of wasting a day or two travelling, you can accomplish face-to-face meetings within a few hours.
Same Time Zone
When business functions are outsourced to other sides of the globe, there will be a need for shifting business processes to early mornings and late evenings to coordinate with the offshore company. This amounts to a 12-hour gap between meetings among team members. The project will suffer a huge cut in productivity. In case any issue emerges in the offshore team, they will have to wait for several hours to contact onsite team heads for making a decision.
Quality And Cost Balance
A major reason why companies opt for outsourcing is because of its cost-effectiveness. It is a main deciding factor while weighing between two options for outsourcing. But, not always does price count more than quality. It is notable that software development is not an aspect that must be done at the cheapest cost. Or else, you might end up paying lots of cash for fixing issues that emerge down the line.
Ultimately, the success of your outsourced software development is determined by the nature of your human connections. It depends also on mutual commitment and trust incorporated by both sides. As such, you must invest maximum energy in these human connections. Additionally, because of the geographical proximity, reduced cost, and cultural similarities, nearshoring stretches your resources further.
In sum, with regard to saving costs on projects and enhancing productivity, nearshoring is a great option for the success of your business. US companies are increasingly rooting for nearshore services in Mexico, and the reasons are clearly apparent. Progress in technology has enabled most companies, including tech firms, to exploit the benefits of nearshoring.