Nearshore Outsourcing Latin America: 9 Outstanding Benefits of Nearshoring in LATAM

Nearshore Outsourcing Latin America:

9 Outstanding Benefits of

Nearshoring in LATAM

By Ronald Tuch

By Ronald Tuch

Benefits of nearshore outsourcing in Latin America

The offshore software development industry has taken the world by storm. Sure, it’s great to fish for talent in a big pool, but something is keeping it from achieving absolute greatness. Maybe it’s the time zone differences, geographical and cultural differences, or other logistical issues having to do with “Nearshore Outsourcing Latin America”

What we do know is that nearshore outsourcing eliminates most, if not all, of these problems! And Latin America is a popular destination that US- and Canada-based companies target. What draws them in exactly? Here are 9 reasons why successful businesses nearshore in LATAM.

What Exactly Is Nearshoring?

Before we begin, let’s define what nearshoring is exactly.

Nearshoring is an outsourcing practice in which a company delegates projects to third parties in a foreign country close to the client’s location. It’s in the same time zone or with a minimal time offset of one to three hours, ensuring a convenient time overlap.

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With a nearshore outsourcing LATAM company, traveling back and forth is relatively easy. And the bond you have with your team can be stronger than in an offshoring situation, thanks to the cultural affinity.

In the context of software development, nearshoring can look like targeting iOS software developers in a close country that is becoming a new tech hub.

What Are the Options for Software Development Outsourcing?

When it comes to outsourcing software development, you have several options. To choose between different outsourcing models, you need to ask yourself what your outsourcing goal is.

If you’re looking for skilled professionals because your in-house team lacks certain skills or its current capacity isn’t sufficient for a project, staff augmentation is a good idea. These outsourcing firms can give you trained professionals who’ll work alongside your team to develop an iOS app or so.

Otherwise, if you need a completely new team to conduct the project from start to finish, consider hiring a managed service provider (MSP). Such third-party providers handle everything in a project from start to finish.

Software development as a service (SDaaS) is a full-cycle service that you customize. To illustrate, you list the specifications you want, and the outsourced team delivers a product with them.

Moving on, we can classify outsourcing geographically into three categories:

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Onshore Outsourcing

The onshore type is where clients and outsourcing companies are in the same country and its legal arena, possibly on opposite coasts. There are no or slight time zone differences and no language barriers, but it can involve steep development costs.

Nearshore Outsourcing

As we’ve mentioned, nearshoring is a practice in which the client and its outsourcing partner are in close proximity. For instance, your software development company might be based in America, so you can outsource to a Latin American country like Nicaragua.

Nearshore software outsourcing gives you the best of both worlds. It brings together the convenience of geographical proximity with the appeal of affordability and the ease of hunting for talent in a big talent pool.

Offshore Outsourcing

In offshoring, companies outsource software engineers from a remote country. The main goal here is to reduce costs and choose software developers from a wide pool. But it comes at the expense of communication challenges, conflicting time zones, and so on.

Why Is Latin America the Perfect Destination for Nearshore Development?

illustrating the culture of Latin America  showing South America formed with coffee beans to highlight nearshore outsourcing

If you’re wondering what exactly makes Latin America an ideal nearshore software development destination, below are a couple of reasons why you’ll want to tap into the software industry there.

Growing Interest & Expansion in the Technology Sector

Latin America has expanded and witnessed growing interest in the tech industry. Many countries in Latin America have invested in IT education, giving us a plethora of experienced developers. In fact, about one million IT experts are located in Latin America.

Speaking of government efforts, let’s look at Nicaragua. The adult population illiteracy rate is down by 5%. According to Central America Data, “The Ministry of Education of Nicaragua tenders the supply of all equipment and technological tools, learning software and related services for Mobile Digital Classrooms in Primary schools.”

Reputable Nearshore Outsourcing Latin America Companies & Government Initiatives

Latin America is globally recognized as a hub for technological advancement. You can see that in the number of tech companies emerging there. For instance, there are over 260 companies in Brazil, over 350 in Colombia, and over 430 in Mexico! Not to mention, there are plenty of nearshore companies across the region.

This is in part thanks to the big investments that governments have made in the digital and IT industry. With various initiatives, countries like Brazil, Argentina, Chile, Mexico, Colombia, and more expect to generate over $140B by 2030 (compared to $34B this year) solely from digital exports!

What Are the Key Benefits of Nearshore Outsourcing in Latin America?

Pensive man thinking about the key benefits of Nearshore Outsourcing in Latin America

That’s great as general talk, but how does this specifically apply to you if you do nearshore software development in Latin America? Below are the key advantages you’ll reap.

1. Convenience & Flexibility

Amidst the digital disruption we’re experiencing, Latin America is known for offering convenient specialized services in the software development field. You can hire employees as needed and as befitting your budget for any project without a hectic recruitment process.

2. Cost Savings

The main reason businesses outsource software development is to pay lower costs. You get to pay lower hourly wages than you’d expect if you were onshoring and save money on equipment, office units, licenses, taxes, and more. This doesn’t come at the expense of quality, thanks to the skilled workforce in these neighboring countries.

To exemplify, Colombia is a great place to save on costs. In Mexico, you can find a mid/mid+ software engineer for $3,156 per month, compared to $10,154 in the U.S. Overall, you can expect to save an average of 70% of the money you would’ve spent hiring local software and iOS app developers.

3. Access to a Vast Pool of Qualified Developers

Over the past decade, investors have allocated $5.5 billion to tech investment in the region. So, it’s no surprise that it’s home to a vast talent pool of IT experts (about one million of them!) Take Mexico, for instance, where 20% of college students graduate with an engineering degree. That’s 110,000 new graduates per year!

This means you have a variety of high-quality software development services to choose from. You’ll find experts in everything from software architecture to tech stack analysis.

4. Collaboration & Cultural Compatibility

With slim to no language and cultural barriers (as Latin American software developers are typically fluent in English), you, your existing in-house team, and your outsourcing partners are likely to communicate seamlessly. This perk means more collaboration, fast problem resolution, and fewer misunderstandings, which could cause errors, delays, and inefficiencies.

5. Minimal Time Difference & Geographic Proximity

A nearshore development company is geographically close, so you can travel to your outsourced software development team if needed (or vice versa).

Additionally, this proximity facilitates real-time communication among the team, thanks to the time zone alignment between Latin America and the U.S. or Canada. So, there shouldn’t be many delays, work disruptions, or missed deadlines. To compare, offshoring in Asia involves almost entirely conflicting work hours, which is highly inconvenient.

6. Reduced Risk

If you want to protect your business operations, nearshoring is a good idea. After all, it’s less likely for political unrest, travel restrictions, and other unforeseen events to halt or disrupt your workflow.

7. Accelerated Development Cycle

Nearshoring allows you to skip the recruitment phase, which is usually over a month and a half for tech professionals. Also, it enables employees to communicate fast, which makes the software development process more efficient.

8. More Options & Better Leverage

Nearshoring means no dependency on established outsourcing hubs like India, which has taken over the outsourcing market for years. Now, you can outsource to Eastern Europe and Latin America, which gives you infinitely more options. You can leverage countless highly skilled app developers in Latin America.

9. English Proficiency & Improved Communication

One of the many benefits of the Latin American job market is English proficiency. Without a language barrier, you can have smooth communication and fewer misunderstandings, errors, cost overruns, and missed deadlines.

The main international language in Latin America is English, as 80% of jobs there require it. So, you’ll find it included in education systems, and it may even be compulsory. In fact, it’s the official language in Providencia, Andrés, Santa Catalina Islands, and other places in Colombia. This also brings to mind the “Colombia Very Well” initiative of 2014, declaring English the dominant foreign language in its schools.

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What to Look For in a LATAM Nearshore Development Partner

silhouettes of two men shaking hand to showcase the concept of a  software development partnership

You don’t want to be stuck with a bad outsourcing deal, so here are some checkpoint items to consider when finding a potential ethical outsourcing partner.

Location

Which nearby country should you outsource to? To figure out the answer, ask yourself how convenient it would be to hire people from that country. What is the average hourly wage there? How big and able is its workforce? How convenient is the time zone difference? Are any big IT companies based there?

Reputation

Working with a reputable partner is a no-brainer for project success. The outsourcing software company should have a proven track record of sticking to deadlines, ensuring client satisfaction, and taking on projects that require the skills you need.

When you conduct research, you should check ratings, online reviews, and the company’s overall digital footprint. This way, you can evaluate the company’s knowledge, competency, and work ethic. Picking the right location can also help with reputation, as you can target well-known outsourcing partners.

Rates

What is your budget for this project? And how does it compare to a particular company’s quote or a country’s average prices? Remember that going for the cheapest service offered by a sketchy outsourcing partner isn’t a good idea; it’s a tradeoff between affordability and quality. Instead, you want an external vendor with a good reputation who will, in turn, protect your company’s reputation.

Communication

With no significant language or cultural differences, nearshoring should facilitate communication, so choose a communicative team to make the most out of this outsourcing option. Consistent communication is key to fostering collaboration and improving performance.

An outsourcing company should understand that and use video conferencing or chatting software frequently to keep you in the loop on the progression of your project. They should also have a responsive support team that can offer you resources, answer your questions, and make needed adjustments.

Workflow

For outsourcing to work, there should be a form of assimilation to your company so that there are no workflow disruptions.

To elaborate, will the outsourced IT professional integrate seamlessly with your company? Will their company oversee their onboarding process, or will they expect you to do that yourself? Do you see eye to eye on topics like team structure, scheduled updates, access to infrastructure, collaboration channels, and so on? If so, software development experts can work efficiently.

Expand Your Development Capabilities by Nearshoring to LATAM With All-Win Solutions

To wrap it up, nearshoring is a great outsourcing method where you hire employees or book services from a nearby country. Latin America is a popular software development hub, boasting a wide pool of experts to choose from. English proficiency, cultural compatibility, and geographical proximity facilitate communication and travel and make the workflow more efficient.

So, where should you start in terms of nearshore iOS app development? This is where we come in. Book a call, and gain access to a free two-week trial with one of All-Win Solution’s developers. You’ll find out how you can reap the benefits outlined here to take your development to new heights!

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