Earlier, organizations look to offshoring to cut costs for outsourcing services and often manufacturing. But today, it is becoming less profitable to implement offshoring services and companies are checking their outsourcing strategies. In short, there has been a shift to favor nearshoring to improve project cost and management.

Due to the complexity and continuously changing requirements of modern IT projects classical outsourcing models increasingly lose in importance. Against this background, over the past several years, the software development industry has seen a dramatic shift in business operations from traditional offshore destinations to nearshore locations.

Nearshore outsourcing partners have also been able to provide better quality control and better services. These factors have made many organizations choose nearshore outsourcing as a more strategically beneficial option, with fewer risks and uncertainties when compared to outsourcing the work to an offshore partner.

Fewer logistical, cultural and language barriers

The benefits of sharing

In general nearshore providers are closer to their clients culturally and linguistically and they share approximately the same business hours with their clients.

However, while the nearshore business model offers a number of clear advantages over traditional offshoring, the industry is young and evidence suggests that not all nearshore location-countries are created equal.

Due to their high levels of personal security, cultural proximity, and time zone alignment, some countries will be fastest growing centers of nearshoring, relative to others.

About South America

Nowadays, and specifically for the United States, South American countries are becoming increasingly popular for nearshoring services, with the advantage of the time zone and the verbal bilingual skills, making overall communication much easier.

Some countries of southern South America, including Argentina, Paraguay, Peru, Chile and Brazil, are fastest growing centers of nearshoring in relation to others Latin American countries as Mexico and Colombia. And this is not casual.

Latin America identifies a big drawback to the nearshoring model, personal security. Many Latin American countries have a bad reputation for being dangerous places to work and live. However, the nearshore environment is incredibly diverse, even between cities in the same country. In contrast to these sad statistics, countries such as Argentina, have very low crime rates, near the rate of the United States.

With a stable democracy and one of the best-educated workforces in Latin America, Argentina offers the full benefits of cost competitive, fluent in english language, and time zone, while enjoying to be one of the safest countries in the Western Hemisphere.

Advantages of nearshoring

Closer proximity and similar time zone

In nearshore outsourcing, outsourcers can frequently visit their outsourcing partners. Since the countries are closer, traveling becomes easier and cheaper. Further, moreover, both countries would be in similar time zone. This makes the work happen at the same time and there is better co-ordination throughout the project.

Cultural affinity

Since both the countries would have a similar cultural background, it would be easier to coordinate and communicate. The similar cultural background bridges the gap between the outsourcer and the outsourcing partner. Organizations feel that this is important as it reduces problems arising out of cultural diversity.

Costs

Today, it is becoming less cost-effective to implement strict offshoring services, due to rework that usually exists when the team has no local interaction, generating miscommunications and delays on the deliverables, beyond the time zone differences that are most of the time present between USA and Asia.

Besides, some nearshore locations offer more affordable services than the services offered in offshore locations. This advantage has made organizations choose nearshore outsourcing with countries like Argentina, Colombia and México.

Stability

Organizations have now started believing that nearshore centers offer more stability and a stable atmosphere when compared to offshore centers. In the past outsourcers have still felt the need to set up additional offices in nearshore centers in case they experience any instability in their offshore locations.

Considering all this advantages, and as we see it, it’s becoming a more sensible alternative to nearshore services to a neighboring country instead of thousands of miles away. What do you think?