About
Nearshore
About Nearshore
What is nearshoring?
Nearshoring is a strategic outsourcing practice where businesses delegate their software development, IT, or other project-based tasks to teams located in geographically close countries. This method blends the cost benefits of traditional outsourcing with the advantages of real-time collaboration and cultural proximity, enabling companies to achieve operational excellence, foster innovation, and scale competitively. The term “nearshore” was first coined by Softtek in 1997 through its pioneering Near Shore® model as it began to work with its first US clients.
A little history...
The concept of nearshore, as first coined by Softtek in the late 1990s, has evolved significantly over time. Initially, it referred to services delivered from an adjacent or nearby location, and Softtek began working with its first U.S. clients using this approach. The idea gained traction during 2002-2003, with Softtek and the Mexican government actively promoting it. Today, the broad market primarily associates nearshoring to Mexico and Canada for the U.S. market, though it can also refer to outsourcing locations close to their primary markets, such as Western European countries outsourcing to Eastern Europe.
1992
The rise of services outsourcing:
A new focus on developing core competencies.
"Do what you do best and outsource the rest."
- Peter Drucker, Managing for the Future: The 1990s and Beyond
1993
The personal computing revolution sparks new tech and talent needs
The Intel Pentium microprocessor was introduced, quickly making software and hardware a core part of a modern business.
This created sharp new demand for application networks and IT support specialists.
1998
Softtek registers its Near Shore® model
Softtek began providing software development outsourcing services to its first clients outside the domestic Mexican market under its Near Shore® model, which remains the underpinning of Softtek's success to date. Like onshore and offshore, the term "nearshore" also describes a location-based classification of outsourcing.
Fun fact: With its Near Shore® model, Softtek became the first of its kind to offer what is now known as "nearshore" outsourcing.
2001
A big year for IT
Frustrated with the pitfalls of legacy software development processes, technology leaders met at the Snowbird ski resort in Utah to draft the Agile Manifesto, paving the way for rapid technology and business innovation to follow:
Mexico was recognized among the top IT outsourcing markets, with total billings reaching 50.5 billion for the first time.
2005
Videoconferencing makes nearshoring even more collaborative
In "The Business Case for Videoconferencing," Wainhouse Research notes that videoconferencing has finally reached the reliability and utility levels to form part of the enterprise core.
Engagements with nearshore providers, which already benefitted from close time zones, now achieve the same or better results with less in-person interaction requiring travel and commutes.
2007
The app economy fuels demand for mobile development expertise
The arrival of the iPhone and its unprecedented app store transformed business and consumer productivity, connectivity, and evolved IT operations.
This sparked new tech and talent needs for organizations looking to increase their digital presence across mobile channels and implement new business productivity solutions.
2008
Softtek sets a new precedent for nearshore delivery
Continuing the evolution of the Near Shore® model, Softtek broadened its delivery network and capabilities to better serve the digital transformation needs of its clients.
With this shift, Softtek was able to offer its clients improved speed to market, agility, competitiveness, and code quality.
2010
Big IT players keep investing in LATAM
Latin America is on a hot streak following many consecutive years of top offshore providers expanding their IT services delivery capabilities in markets closer to their customers.
2012
Demand is high for reliable cloud solution providers
In Cloudonomics: The Business Value of Cloud Computing, Joe Weinman notes the business possibilities of the cloud far outweigh the obsolescence companies risk by not adopting it.
High-value people and systems simply don't have to be on site anymore.
2018
USMCA modernizes NAFTA for digital trade
The new USMCA promotes mutually beneficial trade in North America, including digital components that encourage trade and investment in innovative products and services, resulting in freer markets and more equitable economic growth.
2021 & forward
Demand for nearshore reaches new heights
Many businesses' digital and organizational readiness is being put to the test as the world witnesses rapid disruption and game-changing innovation.
Nearshore helps firms adapt by providing new ways to diversify their capabilities and deliver continuous value.
Why nearshore?
Leveraging proximity has only been the beginning of the nearshore advantage. Today, companies look to nearshore for:
- Access to skilled talent: Nearshore outsourcing allows companies to tap into a broader talent pool in nearby countries. These skilled professionals offer specialized expertise, helping businesses meet their needs efficiently.
- Geographical proximity: By outsourcing to neighboring countries, companies benefit from better communication due to similar time zones. This proximity also reduces language barriers and fosters cultural alignment, making collaboration smoother.
- Cost-Effectiveness: Nearshore services provide cost advantages compared to onshore options. While not as inexpensive as offshore outsourcing, nearshoring strikes a balance between quality and affordability.
- Faster Project Delivery: Reduced geographical distance means quicker project turnaround times. Nearshore teams can respond promptly to business requirements, ensuring faster delivery.
- Cultural Affinity: Similar cultural norms and business practices enhance collaboration. Companies find it easier to align with nearshore partners, resulting in successful project outcomes.
- Strategic Location: Nearshore outsourcing hubs, such as Ensenada and Aguascalientes in Mexico, offer a favorable environment for IT services and development.
Nearshore FAQs
Why are nearshore time zones critical for agile engagements?
Geographic proximity and similar time zones have always added value in nearshore engagements. In the past, this allowed teams to work similar hours and meet in person with minimal travel. Today, remote collaboration has quickly become the norm, and more and more organizations are replicating the benefits of face-to-face collaboration with distributed nearshore teams.
What does it mean to access nearshore talent pools?
Due to a severe tech talent shortage, CIOs struggle to acquire and retain specialized digital teams in their time zones. Nearshore offers CIOs access to top digital talent in a configuration that optimizes onboarding, training, agile processes, and interaction between product owners and development teams. In addition, cross-functional training and quality of life programs have led to lower overall attrition.
Does nearshore protect my enterprise and customer data?
Due to varying degrees of provider access to sensitive data, information security is now part of all outsourcing service delivery. Many nearshore providers have earned a reputation of trust by incorporating infosec practices into all services, applying cross-industry expertise, and maintaining rigorous security certifications.
Does nearshore involve intellectual property risks?
The prevalence of digital trade has led to digital rights being newly prioritized on a global scale. For engagements between the USA, Mexico, and Canada, the USMCA (previously known as NAFTA) includes robust new digital rights protections. Similar momentum is growing with foreign trade institutions around the world.
How can service delivery disruptions caused by geopolitical risks be avoided?
First, geopolitical stability scores should be a criterion in every vendor selection. Many nearshore providers help diversify risk by utilizing multiple geographies to ensure that one geography’s outages (e.g., weather, wars, revolutions) don’t halt overall service continuity. For example, during the pandemic, individual countries have been impacted differently and are at varying stages of “open for business.” CIOs should be able to shift workloads between geographies as countries shut down and then re-emerge from pandemic-related isolation.
We often deploy during holiday rushes. How does nearshore navigate critical deadlines?
Although some holidays are celebrated across borders, many are not. This makes nearshore fit to minimize service disruptions and tension during holiday rushes without the need for costly last-minute services to deploy applications and features.
How do nearshore and offshore differ in terms of cost?
Although nearshore rates can be slightly higher than offshore, the overall cost of nearshore engagements is typically offset by the efficiency gains agile teams attain when working close to the US and in the same time zone.
You can’t just throw a problem over the wall. You have to own it and treat your partners as an extension of your company. So that’s the approach that I take, which is why I traveled to the exact location where our team would be. I met the people, and I was very, very impressed. It made me much more comfortable that we were going to be successful.
Joseph J Rich
Senior Vice President, CIO at Related Companies
Joseph J Rich
Senior Vice President, CIO at Related Companies
Let’s explore how we can take your business further.
Softtek is a global company and the largest provider of IT services from Latin America. With a broad portfolio of business-transforming products and solutions, Softtek helps Global 2000 organizations evolve their digital capabilities constantly and seamlessly, from ideation and development to execution.
Let’s explore how we can take your business further.
Softtek is a global company and the largest provider of IT services from Latin America. With a broad portfolio of business-transforming products and solutions, Softtek helps Global 2000 organizations evolve their digital capabilities constantly and seamlessly, from ideation and development to execution.