What is Nearshore?  

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What is Nearshore?  

As they grow, many companies find that the low availability of skilled software engineers nearby limits their ability to pursue new opportunities. In the face of this problem, outsourcing work to distant countries with talented pools of developers with lower wages, ‘offshoring,’ may seem like an obvious choice. Despite the lower costs, however, offshoring can present challenges, in particular the communication delay from a time zone difference of up to 12 hours, which can hinder team cohesion and slow down project turnaround times.  

With this in mind, many companies are turning to nearshoring — outsourcing to countries within similar time zones. Nearshoring offers cost and scale benefits similar to offshoring– without the major drawbacks. Nearshoring, in the case of the United States with Latin America, is the ideal choice for a company looking to expand without sacrificing product quality or speed. 

There are three choices for a company faced with a lack of qualified developers. First, the company may choose to restrict its work to a quantity and complexity that the local team can support, passing up new projects and opportunities that would require more time and resources than the limited team can provide. While this response may be necessary for a short period of time, it is clearly not ideal. 

The second possible course of action — offshoring — can offer a solution to the problems of the first. By sending some of the more basic or initial project work to a team overseas, the local team can focus their time and energy on more complex and involved tasks. Harnessing both the availability and the cost-effectiveness of offshore developers, a firm can expand its capacity and enable its high-skill local developers to focus on more interesting tasks that require their advanced abilities. 

While offshoring has significant potential to help a company take on more work, there are limitations on its usefulness. For US companies in particular, the time difference can be up to 12 hours. This difference means that little or none of the workday is shared between the local and offshore sites, making communication between the two slow at best, and making team cohesion practically impossible. 

In addition to timing issues, offshore teams often have little cultural foundation in common with the domestic team; while they may speak English, offshore team members’ experiences, assumptions, and even media consumption will often be vastly different from those of the local team, further challenging team cohesion. Finally, as a further complication, travel to these offshore sites is both costly and very time-consuming, making frequent face-to-face interaction between teams prohibitively expensive. 

These limitations bring us to the third possible course of action: nearshore outsourcing, or ‘nearshoring.’ Nearshoring, like offshoring, allows a firm to utilize a large pool of talented developers to expand its capacity and speed at a reduced cost. However, where offshoring requires compromising speed of communication (and thus development), as well as managing a major culture gap, nearshoring requires neither.  

With the nearshore team only one or two time zones away in Central or South America, workdays are almost entirely aligned, enabling extensive communication and collaboration between the teams. This produces both greater cohesion among the whole group and faster development and product improvement. Instead of the long communication delays caused by drastically different time zones, nearshoring enables teams to keep momentum while working together across the distance.  This is a particular benefit for software firms using an agile philosophy. 

In addition to increased real-time interactions with the domestic team, nearshore teams tend to share a much more substantial cultural understanding with the company and its domestic employees than offshore teams do. From shared movies and TV programs to a more general awareness of social and political issues that affect both the US and Latin America, nearshore and local partners have much more commonality to draw upon in working together than would be present with an offshore team. On top of this initial connection, travel to nearshore locations is relatively cheap and quick, making it much easier for teams to meet and interact in person, enabling greater understanding, trust, and collaboration. 

Given the pressing need for more skilled developers, outsourcing can be a vital step for a company looking to grow and continue to serve its clients better and better. Nearshoring is the ideal solution for taking this step, offering a large available workforce without sacrificing speed or team cohesion.  

The next step is connecting to nearshore partners. Identifying reliable nearshore partners can take time, especially if the company has no existing operations in Latin America. This is where Saltar Consulting can help. We have years of experience connecting US firms to reliable, competent partners across Latin America. If you’re ready to consider growing through nearshore outsourcing, let us know so we can help your business rise to shine