Nearshore Vs Offshore Outsourcing: Which is Better?

By | May 17, 2019

Software development outsourcing has been quite a popular project delegation technique for corporations for the past decades. With the internet, access to cheap labor in Asia and technical skills in remote regions of world provided a cost-effective solution to software development concerns. Considering the competitiveness in the local labor market, a potential skill shortcoming; working with Asian or Russian programmers was always considered an astute method of software development management. It’s a mark of how large the market has grown, given its valuation of $85.6 billion in 2018.

Although offshore software development provided an inexpensive and effective means of getting software designed, there were certain structural inefficiencies that would render it redundant. Working with programmers from far-off nations came with cultural and language barriers that could not have been overcome and the time differences made project management an absolute nightmare. With the corresponding development of technical expertise in Latin American countries, local service providers found an alternative that would change the face of outsourcing altogether.

**A History of Far-Shore Outsourcing**

There was once a time when many companies wouldn’t even consider outsourcing because of a rudimentary communications infrastructure that just wouldn’t allow such an approach. In the 1990s, with the telecoms boom; new efficiencies could be seen on the horizon where companies could outsource their labor and mechanically intensive operations to countries with low labor costs. During the decade was the first time we saw call centers in India, mass manufacturing in China and similar low-cost areas around the world. These trends have dominated the world for the past 30 years and will probably continue to do so if the disparities in skills and costs persist.

Understandably enough, with the tech boom over the past two decades and the rise of e-commerce, developing a digital presence has become essential for long-term corporate success. As companies move towards developing increasingly pronounced digital presences, the demand for skilled programmers has risen to the point that is comparable with the demand for labor back in the late nineties and early two thousands.

India, China, Russia and the other outsourcing hubs, having been part of the cycle for decades, experienced a technical skills shift to become experts at programming and development. With the same cost advantages that these countries offered, these countries became focal points for tech project outsourcing from all around the world. This event was encouraged by the need to develop cost advantages that could help the first tech companies and service providers get an edge over their competitors in a nascent market.

With this, tech development outsourcing to these countries also became the go to method of producing goods and services without bearing the larger burdens of in-house developers. Local developers from the United States were treated with long-term capital investments that manufacturers once wanted to avoid.

A History of Far-Shore Outsourcing

**Enter Nearshore Development**

It wasn’t until very long time ago, project managers and corporations realized that working with offshore developers came with some problems. Programmers in India or China, although very skilled, just didn’t have the necessary expertise to be good service providers.

The dynamics of tech outsourcing were far different than those of manufacturing outsourcing; a supervisor wasn’t the only person who needed to be corresponded with the programmers themselves were also part of the communications chain. Since the programmer needed to fully understand the requirements of a project to deliver a project, it was essential that they work directly with the client and that was the wrench in the works.

This led to multiple issues with project management like:

**Unmanageable Time-Zone Differences**

The farther away your developer is from your headquarters, the greater the time-differences between you and your programmers. For example, there’s a 10 hour difference between Mumbai and Washington. This means that when you’re winding business down for the day, your programmer is probably asleep and will not be able to speak with you about the progress of your projects.

These communications gaps make create hindrances in project management and query resolution that can significantly delay project deadlines to incur easily avoidable costs.

**Language Barriers**

For your programmer to provide a product that meets your expectations and satisfaction, they need to thoroughly understand the requirements of the project. The problem with far-shore developers is that they might not always be fluent in English and probably wouldn’t understand your requirements.

This significantly prolongs the durations of your projects and the review periods take the longer than they otherwise would. The Indian programmer, though immensely skilled, just cannot deliver because they can’t understand your instructions.

**Trade-Offs Between Costs and Quality**

Although it’s always great if you can offer a service at lower costs, it doesn’t matter if the end result doesn’t meet the quality standards demanded by your end customers. With the hindrances that come with far-shore programming and the costs associated with project delays or revisions ultimately hinder your capabilities to offer high quality services to your customer.

Many wonder what purpose outsourcing ultimately serves, since they lose out much of their business with the products delivered. Far-shoring, although inexpensive, comes with major long-term organizational costs that could be difficult to overcome.

**The Rise of Latin America as a Tech Hub**

The Rise of Latin America as a Tech Hub

Latina American countries have created quite a stir as countries like Costa Rica and Mexico redevelop their entire economies into massive tech hubs. It seems as if the entire commercial landscape, both the public and private players, is mobilizing to make sure that the continent becomes the center of tech development. The initiatives taken by companies and the governments are causing a massive shift in the skill make-ups to make the labor force tech-savvy and accompanying development expertise.

Cities like Tijuana and Mexico City are widely considered the tech centers of Latin America with thousands of tech companies, each making millions of dollars. Costa Rican developers are widely considered experts in cross platform development, web development and quality assurance testing.

Once these developments became apparent, companies started flocking to Latin America for their software development requirements.

**The Advantages of Working Near-Shore**

The Advantages of Working Near-Shore

Once Latin America went down the path of technological development, it opened new horizons for companies in the United States. The difficulties associated with the work of far-shore programmers were singlehandedly invalidated when business shifted to Latin America. In addition to the cost advantages of working in Latin America, project completion and product quality was unmatched.

Some of these advantages included:

**Little to No-Language or Cultural Barriers**

Latin American programmers are fluent in the English language and fairly conscious of the business environment in the United States. These programmers can take on instructions from their clients and then add some flair to the product itself to create a completely unique user experience that a corporation can call their own.

**Ease of Access**

If you’re working with Indian programmers, you can hardly fly to the country to visit the company headquarters. Considering the close proximity of Mexico and Costa Rica, project managers can simply fly to the company to meet with the teams and their programmers for meetings.

**Effective Staff Augmentation**

Sometimes it’s just not feasible to hire in IT talent as part of your development needs. Considering the accessibility of Latin America from the US, it opens room for collaboration and hiring programmers from Latin America to with your existing teams. Staff Augmentation was never as effective as it is right now with Latin American programmers.

**What’s Better, Nearshore or Far-Shore?**

By now, it should be a no-brainer for anyone reading this when answering which option is better than the others. Nearshore outsourcing offers all the advantages of outsourcing without the problems that far-shore programmers bring. Far-shore outsourcing offers greater advantages that far-shore programming never could.

weKnow Inc. is a software outsourcing company based out of Costa Rica. The company specializes in Drupal and Gatsby development services in addition to their software development and Staff Augmentation services. Visit our homepage for more information on their nearshore software development services in Mexico, Costa Rica and the greater Latin America.

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