While traditional software offshoring requires outsourcing to a different continent, nearshoring requires outsourcing software development to other countries on the same continent, usually across or adjacent to the border. Nearshoring, particularly in Mexico, has become increasingly popular in the past few years thanks to the many challenges (high failure/ delay rates) associated with offshoring. Below are some reasons why many businesses are choosing the nearshore software development route over any others.
Benefits of Nearshore Software Development
Cultural Proximity & Relevance
Although software developers tend to ignore the importance of cultural similarity, most of the development initiatives require an intimate knowledge of, and constant interaction between all members of the team. Due to some of the cultural overlap, plus close proximity between the Northern part of Mexico and the Southern part of the US, software developers won’t have to face too many cultural barriers.
One important cultural aspect is with regards to the work ethics between both countries. One common issue with offshoring is the labor’s inability to meet deadlines – which can be costly. Mexico’s close proximity to the US means that work cultures are sort of similar especially in the IT industry. Supervisory trips can be taken within a day to ensure everything’s right on track. Plus the NAFTA (or the new USMCA) ensures IP and data protection laws are similar between both the US and Mexico.
Mexico’s literally a stone’s throw away from the US – meaning they share a border, and in most cases, the same time zone. Such close proximity means flights to Mexico are a dime a dozen – which is more than you can say regarding other outsourcing locations. Based on statistics from the Mexican government’s Department of Communication and Transportation, their busiest airport – Benito Juarez International – is busy because its top 7 destinations are to the US.
Thanks to the ease of travel between both countries, more and more Mexicans are becoming professional English speakers, so language won’t be much of an issue. Considering how bilingual the US is – with English and Spanish majorities – nearshoring to another country that’s similarly bilingual makes a lot of sense.
Mexico has become such a popular nearshoring destination for IT companies, with Francis Karamouzis of Gartner Inc. ranking it third in the world. This increase in ranking can mostly be traced to the government’s $100 billion dollar investment (under President Pena Nieto) in their transfer and telecom infrastructure. This investment included 4 new airports, some new seaports and several miles of new highways. These upgrades have thus made Mexico a more accessible and desirable IT outsourcing site to investors. Their labor and other IT cost benefits are third only to India and China.
Aside from having similar IT laws, thanks to NAFTA, software companies in the US get to benefit from the lack of tariffs on Mexican IT products.
Outsourcing work to a different country is a very common tendency for many businesses — especially when it comes to nearshore software development. This article went over the various benefits of nearshore software development and how it’s changed how businesses operate. Depending on where you decide to go with to outsource, you’ll have a level of cultural proximity and relevance, accessibility, and cost benefits.