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Evaluating Nearshore Destinations: Key Factors to Consider When Choosing an Outsourcing Location

Ari Lew  |  May 22, 2023  |  

Evaluating Nearshore Destinations for Companies Outsourcing Software Projects


As companies continue to seek ways to streamline operations and reduce costs, near shoring has emerged as a popular outsourcing strategy. Nearshore outsourcing means delegating tasks or services to external providers located in neighboring countries or regions. This approach offers the advantages of outsourcing, such as cost savings and access to skilled labor, while maintaining closer geographical proximity and cultural alignment, facilitating real-time communication and collaboration.

However, selecting the right nearshore destination is crucial to ensure a successful partnership. US-based companies seeking nearshore talent often look towards Latin America because of its close workday overlap, cultural fit, and English language proficiency.

In this post, we’ll explore the key factors to consider when evaluating nearshore outsourcing locations.


Talent pool and workforce availability


Education levels and technical skills: A strong talent pool with high education levels and technical skills is essential for your project's success. A well-educated workforce in a nearshore destination not only ensures a deep understanding of industry requirements but also fosters innovation and adaptability. In such environments, the collaboration between local professionals and international ones can thrive.

Language proficiency: A company's level of quality can be affected by language barriers. Choose a location with a workforce fluent in your organization's primary language to facilitate seamless communication.  A skilled team fluent in your preferred language can easily grasp your business objectives, requirements, and expectations. This linguistic compatibility enables team members to articulate their ideas and concerns clearly, while also actively engaging in discussions and decision-making processes. 

Wage rates: Analyze wage rates in potential destinations and compare them to your current operational expenses. Countries like Mexico offer competitive labor costs while maintaining a skilled and experienced workforce, creating a favorable environment for businesses seeking both affordability and quality. By identifying such destinations, organizations can successfully lower operational costs without sacrificing the caliber of the outsourced services.

Employee attrition rates: High attrition rates can disrupt project continuity and increase onboarding costs. Selecting a nearshore destination with a reputation for workforce stability ensures that your outsourced team remains committed and engaged over time. This continuity fosters long-term partnerships, resulting in a more reliable and productive outsourcing relationship. According to studies, Mexico’s workforce is in the top 10 globally for performance and stability.



Infrastructure and Connectivity


Internet speed and reliability: A stable and fast internet connection is crucial for effective collaboration. It enables real-time communication, swift data transfer, and uninterrupted access to essential tools and resources. By prioritizing internet connectivity and stability when selecting a nearshore outsourcing location, organizations can ensure a smoother, more productive, and collaborative experience.

Telecommunication services: Reliable telecommunication services, including phone and video conferencing, contribute to seamless communication. Access to a diverse range of communication channels enables organizations to maintain close contact with their outsourced teams. By leveraging modern telecommunication technologies, companies can ensure that information flows smoothly across borders.


Cultural Compatibility


Work culture and business practices: Aligning work culture and business practices minimizes misunderstandings. When both parties share similar values, priorities, and work styles, it leads to a better understanding of each other's expectations and processes. This alignment reduces the risk of miscommunication and fosters a more collaborative atmosphere. Managing software development teams in multiple time zones can become a lot easier when work ethics are similar.

Time zone alignment: Opting for nearshore outsourcing locations with similar or overlapping time zones significantly enhances real-time communication and expedites issue resolution. This time zone compatibility allows for synchronous collaboration, enabling teams to hold meetings, discuss ideas, and address challenges promptly and effectively. Nearshore destinations in Central and South America, such as Mexico, are well-suited for collaboration with US-based companies due to their shared time zones. This geographical proximity minimizes the challenges associated with coordinating across different time zones, ensuring that both teams can work in tandem and make decisions more efficiently.

Communication styles: Effective communication helps bridge cultural gaps, allowing teams to express ideas, concerns, and expectations clearly and transparently. By being open to different communication styles and embracing cultural nuances, organizations can enhance their nearshore outsourcing experience, ensuring that teams can find common ground and work together harmoniously towards shared goals.



Legal and Regulatory Environment


Business-friendly regulations: A supportive legal framework encourages business growth and investment. When a country offers business-friendly policies and regulations, it signals a welcoming attitude towards foreign investment, fostering confidence among potential investors and organizations. Consequently, this creates a conducive atmosphere for companies to grow and prosper, making such destinations more attractive for nearshore outsourcing endeavors.

Intellectual property protection: Strong intellectual property (IP) protection laws reassure companies that their proprietary information will be safeguarded. This legal assurance not only safeguards a company's competitive edge but also encourages collaboration and knowledge sharing without the fear of unauthorized disclosure or misuse. 

Data privacy and security laws: Ensure that your chosen location complies with data privacy and security regulations to protect sensitive information. For example, Brazil's General Data Protection Law (LGPD) establishes comprehensive guidelines for data processing and storage, aligning with international data protection standards.


Economic and Political Stability


GDP growth rate: A stable GDP growth rate signifies a strong economy that can support long-term business relationships. For organizations considering nearshore outsourcing, a thriving economy not only signifies access to reliable infrastructure and resources but also provides confidence in the stability of the business environment. By partnering with nearshore destinations with stable GDP growth, businesses can foster mutually beneficial relationships, ensuring sustainable growth and success in the long run.

Government stability: Countries with a history of political stability and strong democratic traditions are more likely to have predictable regulatory frameworks and dependable infrastructure, providing confidence and continuity for businesses seeking to invest. A stable government also demonstrates a commitment to maintaining a healthy economy, investing in education, and promoting technological advancements. By partnering with nearshore destinations that exhibit government stability, organizations can ensure a more secure and reliable outsourcing experience.



Selecting the Right Software Development Outsourcing Partner


Selecting the right nearshore outsourcing location requires careful consideration of various factors, such as labor market conditions, infrastructure, cultural compatibility, legal environment, economic stability, and cost of living. Thorough research and planning are crucial in identifying the most suitable destination for your business needs. By choosing the right nearshore destination, you can maximize the benefits of outsourcing, such as cost savings, access to skilled professionals, and improved operational efficiency.

At Asymm, we excel in bridging the gap between US technology firms and Mexico's exceptional talent pool. Our expertise lies in managing the administrative, legal, operational, and compliance aspects essential for successful nearshore software development partnerships. Collaborating closely with you, we assess your requirements and connect you with skilled professionals proficient in agile methodologies to drive your projects forward. 

Interested in learning how we can assist you in outsourcing your software development project cost-effectively while ensuring timely results? Get in touch with us today.

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Written by Ari Lew

Ari is the Ceo and Co-founder of Asymm. With a passion for product design and media, Ari oversees the UX/UI practice at Asymm and leads client success at the company.