Nearshore Software Development in Mexico: Team Augmentation vs. Project Outsourcing
Nearshore software development in Mexico represents a key value driver for companies looking to develop a tailored platform, mobile app, or undertake other technological projects.
While allowing for substantial financial savings and increased time-to-market, having access to a specialized nearshore software development team often leads to a superior product. The ability to find the exact skill set for the task at hand is more feasible when working with outsourced teams. Unlike with full-time in-house teams, companies aren’t restricted to the talent they have at their disposal.
It’s for these reasons – and more – that companies are increasingly embracing the nearshore as a development solution. However, every company has a unique context or project in mind, which will influence the approach they take to nearshoring.
In most cases, overcoming the barriers to entry when accessing outsourced talent will require working with a nearshore software development company. Specialized nearshore organizations are essential to provide the fast, bureaucracy-free experience that makes nearshoring worthwhile.
In this context, there are two ways that a nearshore software development company can help tap into the benefits of a local region: by augmenting an existing team or undertaking the full project build on the company’s behalf.
Which option you choose will depend on your reasons for partnering and specific project requirements.
Reasons companies partner with a nearshore software development company
In our experience as nearshore experts, there are four main reasons that companies choose to take part in a nearshore collaboration.
1. Difficulties finding domestic talent
IT talent is difficult to find globally, with Korn Ferry predicting a shortage of 85.2 million skilled workers by 2030 in the tech sector alone.
This is most keenly felt in the United States, where a reported 47 million Americans quit their jobs in the wake of the coronavirus pandemic – hitting the software engineering sector particularly hard. It’s unsurprising then that a McKinsey survey found that 87% of executives believe their companies aren’t prepared to address the skills gap in the tech sector.
2. The software product is cost-prohibitive
Access to talent isn’t the only problem that companies are facing. In the US, salary expectations among software developers is high, greatly contributing to the production costs. For some companies, it becomes financially unviable to build the product at all.
3. Progress issues with an existing product roadmap
Custom software builds are complex and teams often face challenges, whether due to problems with existing research, poor communication, attempting too many features, or inaccurate initial predictions with project scope.
4. Roadblocks regarding HR or technical resources
Given the shortage of IT talent, it is particularly difficult for teams to grow or shrink as necessary to meet the ongoing needs of a project. Putting the added cost to one side, the amount of HR resources needed to bring new personnel in quickly is difficult.
Nearshore staff augmentation vs. project outsourcing
To overcome these issues, there are two options that project decision-makers can take.
Option One: Nearshore staff augmentation
Team augmentation, also known as nearshore staff augmentation, allows companies to remain as project leads, while gaining access to the benefits of a local talent pool when outsourcing their software needs to a nearby country, like Mexico.
Companies who take this option often already have a project underway. They may be at the beginning of the project, are facing issues with the roadmap, or have time-sensitive recruitment needs.
Even after partnering with a nearshore software development company, they retain substantial day-to-day control over the operations and progress of the project.
Option Two: Project outsourcing
In the second case, the client relies on the nearshore company to do the heavy lifting. While they are still involved in high-level decision making, such as project direction and creative strategy, the partner company takes care of the development cycle, including design, management, QA, and similar critical responsibilities.
While both staff augmentation and project outsourcing represent key benefits, deciding which approach to take will have a large impact on the process and outcome. For this reason, it’s important to understand the pros and cons of each collaboration.
Pros of nearshore staff augmentation
We’ll begin with the pros associated with augmenting your team.
Saves on costs
Both team augmentation and project outsourcing will save on costs when compared with the onshore outsourcing alternative or hiring full-time staff. However, depending on specific needs, one will represent a more cost-effective solution than the other.
In other words, while this is a pro, it’s vital to research both options to find out which makes sense for your context.
Increased capacity and flexibility
Staff augmentation allows for a sponge-like model, where you incorporate new members when needed for set tasks. Once they’ve finished these tasks, and assuming there’s no more work, you can easily return to your normal size.
This is particularly useful if your project is going through a critical phase and you need extra hands to ensure its success. Alternatively, some companies experience seasonal demand and many need to augment their teams to meet it, whether they’re undertaking a specific project or just maintaining current commitments during busy periods.
Fewer commitments and access to expertise
There is a certain amount of commitment involved with project outsourcing. If you collaborate with a nearshore partner, they need to have guarantees in place to be able to build the team and carry out the project.
With staff augmentation, you have more freedom to expand and contract as you please. This is particularly useful for companies that have a strong in-house team but need to supplement it occasionally.
In this instance, companies can gain low-commitment access to the exact skills they need. No in-house team can be experts in all areas and team augmentation allows project leaders to leverage the niche talents of experienced developers, with less paperwork and on a short-term basis.
Project outsourcing requires companies to hand over the control of day-to-day business to a third party. There are both positive and negative aspects to this.
When everything goes well – and you have a nearshore partner you fully trust – this hands-off approach allows companies to concentrate on other tasks safe in the knowledge that your project is underway.
However, even with regular reports, it’s impossible to have the same understanding and control over your project as with staff augmentation. Although the new staff is hired on an ad hoc basis, you can expect the same level of work from them as you would in-house employees. This means you can ensure your company’s coding standards are met, work alongside them in sprints, or more.
Cons of nearshore staff augmentation
There are also a number of drawbacks that you need to consider before augmenting your team.
The right nearshore partner
This is undoubtedly the most critical area and you need to be confident in your partner’s ability to supply expert talent, while conforming to your pre-established budget. Finding a trusted partner should be at the top of your agenda. If your nearshore partner doesn’t deliver consistent, quality results, it can put your entire project in jeopardy.
More staff requires greater organization and your company needs to be capable of meeting the new demand. If you are planning on incorporating just a few new members, this should be easy to manage.
However, for larger projects with a large amount of additional staff, it’s important to ensure that your in-house management is able to ensure a safe work environment, guidance, and anything else that a growing team needs.
Pros of project outsourcing
When it comes to project outsourcing, many of the benefits remain the same as with team augmentation, although there are differences. It’s also worth noting that this comparison will focus exclusively on nearshore project outsourcing.
At Asymm, we specialize in nearshore partnerships because it provides the best mix of financial savings, access to specialized talent, and conditions for productive collaboration when compared to onshore or offshore alternatives.
As with team augmentation, nearshore project outsourcing does lead to financial savings, when compared with building an in-house team or relying on onshore outsourcing. If you find a trusted nearshore software development partner, you will save on recruitment, onboarding, training, and salary costs.
For example, software engineers in the US charge $100-150 for their services, while in Mexico you can expect – depending on the skill set, seniority, and similar factors – an hourly rate of $50-60 an hour.
Reduced ongoing stress
Managing and ensuring the progression of larger software builds is a difficult task even for experienced project managers or leaders. For project leaders who have never undertaken a project on this scale before, there are numerous considerations at a strategic level, alongside the ongoing tasks needed to ensure progress.
By outsourcing your entire project, the internal team and decision makers are able to discuss strategic decisions with proven experts and offload the tedious day-to-day tasks associated with building and maintaining a project. Not only do businesses not have to look for the software developers, but the partner company will also be responsible for sourcing designers, QAs, and any necessary project managers.
Access to proven talent
Established nearshore software development companies work with the same individuals across projects and become fine-tuned to individuals’ skills, talents, and ways of working. In this way, companies are able to get access to the best talent available in the nearshore company.
For example, at Asymm, we regularly partner with developers and professionals based in Guadalajara, Mexico. Not only does Mexico have a strong talent base – with 130,000 engineers graduating annually – but we have direct access and long-standing relationships with the best of this talent.
Enhanced product quality and security
Having access to superior talent at an affordable price results in a more secure, high-performant product. This is because your partner has the luxury of identifying the skills needed and then searching their network of professionals who are best suited to the task.
The end result is a product that not only performs exactly as it should, but also features enhanced security systems that will protect your business in the long run.
Cons of nearshore outsourcing
With nearshore outsourcing, it’s important to take a number of considerations on board before undertaking a new project. While we will discuss specific potential problem areas, the majority of these can be avoided by outsourcing with the right partner who you fully trust.
One of the main pros of nearshore outsourcing is the reduced stress involved with the entire process. However, this reduced stress also equates to reduced control over the managerial side of the project.
Beyond choosing your partner well, this can be further mitigated through regular project updates and solid communication practices.
Again, by handing off the bulk of the project, you are increasing the risk of quality issues arising. When this does happen, it can be particularly difficult to find out who is responsible. Whether due to coding or quality issues having a displaced team makes quick resolution more challenging.
The best line of defense against this is to choose a partner that you are certain is able to live up to your expectations. Even so, it’s recommended to follow all legal safeguard best practices, such as NDAs, etc before a project starts and to ensure transparency.
Any approach you take to undergoing a large software build will have positives, negatives, risks, and rewards. That said, when all considerations are taken into account, the cost savings, access to specialized talent, and quality associated with nearshore software development makes it a great outsourcing model choice.
At Asymm, we specialize in facilitating operations between US technology companies and Mexico’s talent pool. When working with us, we orchestrate the administrative, legal, operational, and compliance responsibilities that are required for the nearshore software development market in either a team augmentation or full outsourcing context. We work directly with you to identify your needs and source the talent to bring your project to life.
Reach out to us directly to tell us about your project and how we can help.