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Whitepaper

Nearshore Software Solutions as an Outsourcing Strategy

February 18, 2021
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Common Staffing Challenges

Building a good team is not a trivial task. It is critical to have the right combination of skills and experience to achieve successful business objectives, but staffing comes with its own set of problems. Below are common challenges that technical teams are facing and how to overcome them.

Market Competition and High Salaries

Many organizations are determined to add and retain the best resources. Sadly, extremely qualified professionals are few, and therefore it is expected that they get often contacted for new job opportunities.

Highly skilled candidates tend to obtain several offers when they are actively looking for a new job. The hiring teams get into a bidding process that makes them go to their top limit or above their budgets.  Similarly, organizations work on staff retention mechanisms like salary raises and promotions that usually increase payroll costs.

Startups and SMBs (small and medium businesses) use mechanisms like company shares and other incentives for hiring and retention. But there is always a point where they cannot afford to continue with such practices.

Lengthy Hiring Process

Hiring the right candidate for the position may take several weeks, and in some cases, months. This process becomes more challenging when the role requires unique competencies. It is common for hiring managers to have high expectations at the beginning of the search and lower them as time passes. In many situations, the hired candidate was not one of the top three.

This problem creates a hidden cost burden since the new hire may take more time to be efficient, or other team members will need to compensate for any gaps during the learning curve.

Talent Turnover

Given the tech talent shortage, turnover is a challenge for even the most prominent companies. One point that the article deduces is that tech turnover is likely driven by increasing demand and compensation. Top talent is more eager to jump on new opportunities.

The departure of expert members brings adverse effects in the short term, like a decrease in the team's performance and other undesired challenges like a lengthy hiring process, payroll cost increases, or a lesser talented employee.

Unfit or Outdated Skillset

This challenge is common in legacy teams where the hiring manager brought members for specific skills no longer significant in the industry. Not all organizations offer continuous training to their employees, and development costs are usually high. Some professionals may keep their skills up to date by their means, but this case is the exception.

Teams and individuals must stay current with technology trends, especially in the software industry, where the life cycle of some tools and frameworks only lasts a few years.

Nearshore Outsourcing

Businesses use the mechanism of outsourcing to address the previously mentioned challenges. Outsourcing is an agreement where one company hires another company to delegate activities for different reasons. Some of these reasons can be: 1) the team does not have the expertise or capacity to execute the tasks. 2) the total cost of doing the work in-house exceeds the costs to hire an external provider, or 3) it is not in the company's best interest to dedicate resources to such activities because they want to focus on more critical business areas.

Outsourcing the work to a vendor who can immediately support the initiatives is an excellent way to overcome staffing shortcomings. Outsourcing to a nearshore vendor is an ideal cost-effective solution.

Nearshore outsourcing should not be a trade-off decision but a smart and flexible mechanism that reduces costs while getting the highest technical quality. Companies shall never compromise on quality, so it is crucial to hire a nearshore vendor with validated credentials, advanced partnerships, and certifications from tech leaders such as AWS and Salesforce (MuleSoft).

Software Development Outsourcing Models

The Software Development industry leverages different outsourcing models to stay competitive in ongoing innovation, efficient releases, and sustainable business success. Outsourcing is an agreement where one company hires an external service provider to delegate activities to a more experienced and higher skilled team, to lower costs, or to be able to focus on more critical business areas. There are different models based on the way a Software Development project is approached and delivered:

Staff Augmentation

This outsourcing strategy consists of evaluating the existing resource capabilities and determine the gap in the skills that a project needs. With this practice, the companies extend their teams with the right skills by contracting staffing services from vendors who have the desired knowledge and experience. One common objective is to use staff augmentation for cross-training their teams with savvy contractors.

The client is still responsible for managing the contractors and the work they will be doing. In this model, the vendors allocate their employees to client accounts for a specific period with extensions or renewal options.

Project Outsourcing

In this model, the client delegates the entire project to a vendor. In some circumstances, the client only entrusts parts of the project. The objective is to offload a large bulk of work to the outsourcing company that will be entirely responsible for developing the project. This model is ideal if the client wants to have a fixed price for the project's costs.

Historically, this type of engagement tends to be less flexible for changes in the requirements since these are defined in the contractual terms. Any modification is queued up to a later phase of the development, and it adds extra costs.

Consulting

In many cases, teams hire external consulting agencies or professionals as an expert voice to assess a specific area or a practice and advise on strategies to achieve business objectives. These types of engagements are focused more on strategy definitions than development. By contracting a consultant, clients have access to deeper levels of expertise that would be costly for them to retain as a full-time employee in the long term.

Benefits of Outsourcing to Mexico

Nearshore Outsourcing is a derivate of the business term offshoring. In contrast to offshoring, where the relocation of a business process moves from one country to a distant one for lower-cost motivation, the relocation in nearshoring is to a nearby country. In the USA, nearshoring also applies to any country that shares at least one time zone.

Younger generations in Latin America are very fluent in English, mostly professionals in the Tech (Software) industry. Teams that interact with nearshore companies are generally positively surprised about the remote contractors' high communication skills.

Why Nearshore to Mexico

  • Culture: Cultural alignment with the business is readily achieved because there are similarities between cultures due to their proximity.
  • Communication: English language skills and time collaboration are the bases of Nearshore and Tech services. Proximity also facilitates in-person interaction when required and available.
  • Travel distances: The geographical proximity of Mexico to the USA and Canada makes it possible to travel to the clients' location within the same day if needed.
  • Same workdays and time zones: Mexico's labor culture is virtually the same as the USA and Canada, having the same workdays, and Mexico shares three out of the four U.S. time zones.
  • Intellectual property laws: Mexican laws protect I.P. Mexico is part of the USMCA (United States-Mexico-Canada Agreement). The Intellectual Property Rights chapter in this agreement establishes a legal framework of minimum standards in North America. It aims to support tech innovation, promoting a healthy balance of rights and obligations.
  • High technical talent: Mexico has the most extensive and highest-ranked university in Latin America: the Universidad Nacional Autonoma de Mexico (UNAM), the first university founded in North America. Mexico has 1,250 institutions of higher education and a population of 120 million people.
  • Cost-effective: Similarly to offshoring, lower costs of living and lower wages in Mexico, as a developing country, make it possible for companies to accomplish technical goals at a lower price than their U.S. counterparts. On average, Nearshore rates may not be lower outsourcing cost options than offshore rates, but companies benefit from a higher ROI.

The IO Connect Services Difference

IO Connect Services was founded to overcome the outsourcing challenges and provide cost-effective outsourcing solutions to companies. Our consultants go through a very selective hiring process, and we invest heavily in their training and continuous education.

Our guarantees with our clients are:

  • Academic credentials: our staff has academic degrees that are U.S. equivalent, and they can be validated by educational organizations like World Education Services.
  • English: our team members communicate in English at a professional level and can present a qualifying TOEFL score if requested.
  • Technology Excellence: we value and promote the continuous academic preparation of our engineers.
  • Certifications: our employees get certified in primary and secondary service practice technologies. We cover all the certification expenses and promote a culture of getting high-level certifications.

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