Why Companies are Moving to Nearshoring for IT Needs

Outsourcing has technically been an acceptable business practice since ancient times, when certain artisans hired others to produce all or part of their products’ components. Offshoring for IT projects, however, began to gain wider acceptance in the late 1990s as companies launched accelerated (and often belated) programs to address the upcoming issues associated with Y2K and to take advantage of the so-called “dot-com” bubble to harness what seemed to be limitless opportunities to embrace modern technology.

The Internet and high-speed connections made it possible for a project manager in the U.S. to supply a team on the other side of the world with specifications needed to design the GUI or write the code for a project. However, without an available pool of trained, competent talent, offshoring would have been impossible. Fortunately for U.S. companies, such workforces existed in India, Russia, China and several other countries.

The Growth of Outsourcing

Following the Y2K solutions, another technological advance spurred an additional flurry of activity: the growth of smart devices. In what seemed to be the blink of an eye, merely having a website was no longer enough. Users wanted access to mobile apps and responsive designs that were optimized for whatever device they chose. Social media sites exploded, requiring companies to rethink their marketing methods. Mobile app development became an important part of offshore developers’ business as more and more U.S. companies scrambled to provide their customers with all the “bells and whistles” they demanded.

Offshoring Hits a Snag

This is not to imply that offshoring was without its issues. Language barriers, time zone differences and “culture clashes” made offshoring a bit of a challenge. Often, managers at U.S. companies lacked the skills to provide outsourced teams with the detailed specs needed to work independently. Projects could be delayed due to the differences in time that provided little overlap in working hours. In many cases, companies could only watch helplessly as the savings they expected to achieve through offshoring dwindled.

Intellectual properties were occasionally “appropriated” and recycled for projects for other clients, who in some cases, were in competition with the original client. Furthermore, politics are constantly changing; some businesses and agencies have reacted to public disapproval of U.S. companies sending jobs to countries that have not always been on friendly terms with the U.S. Security issues, especially after 9/11, have made far-shore outsourcing even more challenging.

Nearshore Outsourcing

While U.S. companies were busy outsourcing IT projects to teams on the other side of the world, other countries quietly focused on supporting the development of technical industries within their own nations. This has been especially true in countries south of the U.S.-Mexico border.

There are many benefits of nearshoring not offered in traditional outsourcing arrangements. Differences in work hours are not substantial; many nearshore developers have work days that only vary by one or two hours from the typical U.S. work day. Cultures are often more similar, and although differences in languages can exist, the availability of U.S. workers who are fluent in languages such as Spanish, French or Portuguese outpaces those with fluency in languages common in some other parts of the world.

Explore Nearshore Outsourcing for Yourself

Since 2000, EX Squared  has provided a wide range of technology outsourcing methods. We can help you determine whether your enterprise is ready to embrace outsourcing, guide you through an evaluation of nearshoring versus offshoring and help you evaluate your options. We have prepared a whitepaper on nearshore outsourcing. Download it today to learn more about the advantages of nearshoring.

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