Lately, there has been a shift in software development, with fewer companies opting for your traditional offshore destinations such as India (a cliché in this industry, at this point). More and more companies are choosing to keep business closer to home, by pursuing nearshore development services in nearby locations; namely, Central and South America.
Like most things, this move presents advantages and disadvantages, but the rising number of US-based organizations opting to work with developers in nearshore destinations like Mexico, Brazil, Argentina and Bolivia indicates that the nearshore trend continues to bring value to these projects. In this article we take a look at some of things that need to be taken into consideration when comparing the nearshore development services offered by each country.
The first point to be made here is that not all of these countries present the same political, cultural and social climate. Some of them are developing countries with unstable environments, where it’s sometimes not the safest place to take a vacation, much less make use of nearshore development services. A company that chooses to put their software development in the hands of workers here (however qualified they may be) is taking a certain risk, at the end of the day.
It is critical to ensure that development teams are vetted properly, and a local or a state-side nearshoring project manager may be the key to ensuring that you are working with a well-estabilished reputable team. Now these risks are prevalent in even the most established offshoring destination, but having a destination that is close-by can ensure that you can establish face-to-face communication with your team.
Although the countries close in geography like Canada, Mexico and Costa Rica are currently the leaders in nearshoring in the Americas, Paraguay, Chile, Brazil and Argentina take the prize for having the most cost effective, efficient and high-quality nearshore development services they offer. That makes them a favorite over their counterparts in the more established countries.
But even if South America is, at least apparently, the better option from a pure cost point of view, let’s not forget that they are unfortunately further away. That makes them more expensive if we factor in travel. The cost benefits balance out for longer-term projects or when you are after a long-term development relationship. In the long run, the lower wages and cost of doing business in South American destinations will certainly balance out any additional travel expenses incurred by selecting these further nearshore development teams.
At the end of the day, Latin America is still a better option, economically-speaking, than China or India, which is where companies usually choose to offshore.
The greatest benefit of nearshoring is by-far the minimizing of time zone gaps. It’s true that by virtue of being considered for nearshore development services, they are considerably closer than a country that would be traditionally used for offshoring, such as China or India. But we still cannot ignore the fact that the farther they are, geographically, the bigger the time gap will be, making the preference for nearshoring less attractive. Sharing time-zones ensures that your team is able to work with the nearshore team during regular office hours with minimal time loss due to time lag. Here is a chart of US Time Zones, and their counterparts in South and Central America.
|Standard Time Zones||Pacific||Mountain||Central||Eastern||Atlantic|
|Nearshore Countries Sharing Time Zones||Canada||Canada||Guatemala||Venezuela||Venezuela|
|Cuba and other Caribbean Countries||Paraguay|
|Dominican Republic and other Caribbean Countries|
Many nearshoring development services have staggered work hours for their staff, to ensure that time zone lags for their clients are eliminated. That means that if a decision needs to be made regarding a project, or a urgent fix is needed, they can be resolved within the work day. Not having to wait for your team on the other side of the world to wake up. Anyone who has worked with offshore teams can relate to this.
Experience in nearshore development services
This is another thing to consider – all of these countries (Mexico, Paraguay, Brazil, Chile, Argentina) are not as publicized as their counterparts in Asia and Europe, but they have been the secret weapon for many US-based companies for over a decade. They are still growing, so they are eager to take on new projects, and work ethic, productivity and loyalty are high. There is still a lot of work to be done in some of the emerging countries, but companies who choose to nearshore here will take on the roles and responsibilities of pioneers, with the good and bad that it entails. If you are looking for a long-term commitment than taking the time to find the right team will pay-off ten fold in the long run.
Language & communication
Even though the languages spoken in this part of the world are overwhelmingly Spanish or Portuguese, the geographic and cultural proximity to the United States and Europe means that most University and College educated workers are also fluent in English. Taking into consideration that Europeans and Americans are also significantly more likely to be familiar with Spanish than Indian or Chinese dialects, for example, this makes Latin America is a better choice than other more traditional providers of nearshore development services.
The common language not only makes communication more open, free, efficient and less difficult, but it also reduces or entirely eliminates the misunderstandings common in a multi-national team. This cuts back on time, costs and burdens. In absence of a language barrier, business is considerably easier and more direct. The value of direct communication cannot be underestimated.
If we look at all the data and all the points made – both positive and negative – about the nearshoring potential of countries in Central and South America, we can assume that they present themselves to be attractive locations for providing nearshore development services. They are cheap, close by, the language barrier is minimal and they tend to have a similar culture to the United States and Europe.
However, if they seek to become centers of nearshore development, the high crime rate in some of these locations represents a serious problem that cannot be overlooked. Unless the political and social instability in these countries is addressed and dealt with, they will be passed over by companies looking for suitable locations. That being said, by working with a local or US-based Project Manager who has experience in the area and can introduce you to the right teams.
The happy medium seems to lie in countries like Brazil, Argentina and Chile, which are chosen as nearshore partners more and more often, as they continue to grow as new centers of development services and are already competing now with the considerably better-established China or India.
That being said, despite its gang and drug cartel problem, Mexico still has some safe and prosperous cities to offer as adequate settings for business. Mexico has actually become one of the largest IT service providers in the world and it continues to rise among the ranks, so it’s not an option to be easily dismissed.
All in all, there are many pros and cons to be considered. A company should look into each and every one and only then choose the best option when debating whether or not to use nearshore development services provided by countries like Mexico or other locations in Latin America.