Did you know that 76% of executives outsource IT functions? There are several factors that drive them to make these decisions, including:
- The need to lower costs related to both internal (staff retention, rising salaries, etc.) and external (economic uncertainty) factors.
- The need for hyperspecialized professionals to keep up with digital disruptions.
- The competitive advantage of increased capabilities at higher capacities.
This trend has proven the benefits of various outsourcing models — two of the most popular being nearshore and offshore. In this article, we’ll explain their differences so you can determine which best suits your business.
Nearshore Vs Offshore: The Key Differentiator
Let’s first explain the main distinction between “near-” and “off-” shore. Typically, nearshore countries are the ones closest to the US: Canada and Mexico.
But the pandemic changed this.
Though frequently traveling to other countries for in-person meetings wasn’t incredibly common, the pandemic forced the remote work model to work. This made the distance factor obsolete.
“Near” now refers to time zone alignment. This means Latin American countries like Argentina and Brazil are now considered nearshore, despite being thousands of miles away.
On the other hand, offshore refers to regions in Eastern Europe and Asia. There, the average time zone differences are much more extreme.
To put it into perspective, 8:00 AM in Dallas, Texas is also:
- 11:00 AM in Buenos Aires, Argentina
- 3:00 PM in Budapest, Hungary
- 7:30 PM in Bengaluru, India
- 10:00 PM in Manila, Philippines
By aligning time zones, communication is consistent, increasing productivity and maximizing project efficiency.
Nearshore Vs Offshore: Benefits
Now that you know the key differentiator between nearshore and offshore, let’s explore the benefits of each model.
1) Cost Reduction
The top reason why most companies outsource is to lower costs. The talent shortage in the US has made it increasingly expensive to find, hire, and retain talent.
As technology gets more complex and companies fight to stay relevant, the need for highly adaptable talent grows. Additionally, the number of people who are upskilling or entering the job isn’t enough to keep up with demand. This makes finding qualified IT professionals more difficult and more expensive every year.
Outsourcing, however, helps lighten the load on a single market by employing more diverse talent pools. In this respect, both nearshoring and offshoring are viable options. There are highly skilled professionals willing to work at more affordable rates in various regions across Latin America, Eastern Europe, and Asia.
2) Seamless Scale-up
Another critical reason why companies outsource is to scale up their business. Here are some things you need to know if this is what you’re looking for.
As mentioned, countries in Latin America like Argentina, Brazil, Colombia, and Mexico have almost a full workday overlap with the US. This means teams can seamlessly collaborate throughout the workday.
On the other hand, other major talent pools like Eastern Europe and India share with the US only 1 or 2 hours of the working day, which may cause misalignments in communication and, therefore, add complexity to the day-to-day work of the team members.
Nearshoring has the benefit of opening talent pools that share values with Western cultures, especially the North American culture. In general terms, developing countries from Latin America have traditions and cultural consumptions that are strongly influenced by the US, resulting in more fluent relationships and easier onboarding processes.
Latin America has also the perk of having English as the most frequent second language for professionals. For people who have advanced education, learning English is a must in almost all of these countries. As a result, there’s a large pool of talents that speak fluent English and can communicate perfectly at work.
3) Technical Proficiency
Another factor that makes Nearshoring interesting for the US technology market is the qualification of most professionals. Brazil, Argentina, and Mexico to name the best known are countries with amazing universities and count on large pools of certified, highly-skilled software engineers.
Of course, finding and vetting them isn’t that easy if you’ve never hired Latin American talent before, and most likely a local partner could be needed to succeed in this task.
Accessing the Best Global Talent
This era is full of challenges for businesses of every size and industry. Technology, among all them, requires top professionals capable of leading a process of transformation and digitalization.
In this sense, Offshoring offers a huge talent pool around the globe, but Nearshoring ensures a series of key perks that place it as a much more convenient option.
Do you need help finding the best software engineers in Latin America? Set up an appointment with an Inclusion Cloud advisor and hire top tech talent in 72 hours.