There’s one common problem that many software development companies in the U.S. share today: talent scarcity. There are simply not enough qualified yet affordable developers to meet the demand, especially when that demand arises quickly and surprises you. The traditional way of recruiting is no longer working that well—plus, it’s slow and expensive. Nearshoring has emerged as a much better solution to scaling tech teams.
But what is it exactly and is it the right choice for your company? Today, we bring you a simple guide to nearshoring in order to quickly and cost-efficiently scale your software development team, with tips from experts in nearshoring in the Americas.
The Broad Definition of Nearshoring
Nearshoring is the business practice of outsourcing an operation or service to a neighboring or nearby country. Nearshoring spans various industries and countries with applications ranging from custom software services to the increasingly popular field of manufacturing.
For example, a German company could partner with companies in nearby countries in Eastern Europe or in Africa, since they share similar timezones. For the United States, popular nearshoring destinations would be anywhere in the Americas, including the Caribbean, Central and South America.
The Three Pillars of Nearshoring: Culture, Proximity, and Time Zone
Kirk Laughlin, the Founder and Chief Analyst at NearshoreAmericas.com, joined us in a past episode of the Scaling Tech Podcast to discuss nearshoring in the Americas. He explained why South America is becoming an increasingly attractive destination for U.S. companies looking to nearshore their operations.
Here’s how he explained it:
“Chile, Argentina, and Uruguay are not exactly close to New York City or most U.S. cities. However, this classic three-legged pillar or three-legged stool of nearshore, I think each of them is extremely important; one of each is obviously culture and all of the advantages we all get to experience around what I like to say, getting on the same page faster.
And then of course, you have proximity, being able to generally get to the destination relatively quickly, lots of good flights direct in most cases and same day. There’s people you know in Texas and Florida who get to go down to their partners and be back the same day.
But the big one relative to nearshore, which I think is super important, is this time zone compatibility. And because of that, the entire South American continent qualifies.”
To summarize Kirk, a good nearshoring location has:
- Cultural compatibility: to ease of teamwork
- Time zone compatibility: for ease of communication
- Proximity: for ease of travel
Nearshoring vs. Offshoring for Software Development Talent
Nearshoring is a form of offshoring but with a critical difference: proximity. This proximity is particularly valuable for software development companies, not only for ease of travel, but also as it directly supports the need for speed, accuracy, and agility in project execution.
Because nearshore teams can often deliver faster and more effectively due to their geographical and cultural closeness, they have a competitive edge over other outsourcing options in the global market. Kirk nicely puts it,
“I think the arc, or the direction that the IT world has gone in general, factors those who can be nimble and meet the business imperative, and it’s all about accuracy, speed, and agility. Those things all put the nearshore in an advantageous position against the so-called competitors worldwide.”
To further illustrate why nearshoring is often a smarter choice than offshoring, Scaling Tech Podcast co-host David Alfaro shared an intriguing legal example that highlights the complexities and potential challenges of offshoring to distant countries with far different cultural expectations. In a recent case, a Netherlands court ruled against a California-based company in favor of a remote worker based in the Netherlands. The dispute arose when the company fined the tech worker for refusing to turn on their webcam.
In contrast, such issues are less likely to occur in nearshoring relationships, particularly between the U.S. and Latin America, where there is greater alignment in business practices and cultural norms. David sums it up well,
“Those kinds of things don’t happen between the United States and Latin America. It’s different. It’s a different system. Here the governments are glad that they’re having extra income somehow, some way.”
Is Nearshoring Right for Your Business?
Before diving into nearshoring, it’s crucial to assess whether it aligns with your business goals and operational needs. Here are a few considerations to help you decide:
- Current Challenges: Are you facing high labor costs, communication barriers, or difficulties in scaling your operations? Nearshoring could be the solution to these challenges by providing cost-effective, skilled talent in closer proximity.
- Nature of Your Operations: Consider whether your business processes can be effectively managed from a nearshore location. Industries like software development, customer support, and manufacturing often benefit significantly from nearshoring due to the availability of specialized skills in these regions.
- Time Zone Sensitivity: If your business relies heavily on real-time communication and quick turnarounds, nearshoring offers a distinct advantage by keeping your teams within similar time zones.
- Cultural Fit: Evaluate the cultural and linguistic alignment between your business and potential nearshore locations. A strong cultural fit can lead to better collaboration, fewer misunderstandings, and smoother integration.
- Long-Term Strategy: Think about your long-term business strategy. If you’re planning to expand your operations or tap into new markets, nearshoring can offer the flexibility and scalability needed to support your growth.
Ready to Explore Nearshoring to Scale Your Software Development Team?
Nearshoring can be a game-changer for businesses looking to reduce costs, improve efficiency, and tap into new talent pools. However, it’s essential to approach nearshoring strategically to ensure success.
At AgilityFeat, we specialize in helping businesses like yours navigate the complexities of software development nearshoring. Our experienced team is here to guide you through every step of the process, from selecting the right software developers to building strong, collaborative teams, and even to helping you establish your own subsidiaries in Latin America via a Build-Operate-Transfer model
Ready to take the next step? Contact us today for a free consultation to discuss how nearshoring can benefit your business. Let’s work together to unlock new opportunities and drive your business forward!
