As the global economy becomes more and more interconnected, it’s created an unprecedented amount of potential for a skills exchange based on comparative advantages. Silicon Valley isn’t the only place where you’ll find tech experts and innovators anymore. Countries like Costa Rica, India and China have created entire sectors that are devoted to catering to foreign clients for Web and Mobile Development.
Organizations across the world are now seeking out nearby, Cost-effective technical expertise, that offers similar or even better results, at lower costs. In terms of a cost-benefit analysis, these tech havens are enabling off-shore service providers the opportunity to improve service delivery beyond all expectations. As the world becomes digitized, foreign software development firms are being increasingly sought out for the advantages they offer.
This new method of augmenting human resources, by employing off-shore companies is called Near-Shore Software solutions provision. Specialist tech agencies work for off-shore clients to provide technical expertise which may either be too costly or just simply unavailable in-house. Even at this moment, you can probably find hundreds of foreign developers who’ll complete a project at a fraction of the cost that your local developer would. You’ll find little reason to complain of the work and will develop a competitive edge that your peers in the industry would find hard to keep up with.
Why Outsource Software Solutions?
There could be multiple reasons for why any business would go offshore. Global consultancy powerhouse PricewaterhouseCoopers (PwC) identified three reasons why CEOs choose to work with offshore companies, as follows:
- Access to technical skills
- Room to focus on core competencies
Let’s look at each of these factors to see how these advantages come to apply when you outsource:
1. Cost Advantages
Developing low-cost business models is always a great way to improve your business prospects. The tech industry works on somewhat uniform cost models. Some of these costs are passed onto the customer, because businesses try to overcome their cost burden through higher prices. The lower your costs, the lower a burden you have to pass on to the customer; this makes your services far more viable in your customers’ eyes.
Nearshore software developments offer multiple cost advantages, which ultimately make your services more affordable in comparison to your competition. This improves your profitability, either through increased sales, lower costs and also offers the chance to develop a significant foothold in your industries.
No Cost Associated with Finding Technically Skilled Labor
Since software developments rarely ever require you to exchange any goods across borders, it’s not like you have to pay any export/import duties when you outsource these services.
The only thing that ever-stopped businesses from outsourcing before was the inability to go to other markets to pick up labor without visiting the markets themselves. Now, you can just Google “Software Development” and you’ll find literally thousands of firms who are offering just that very service. You can get in touch with them online and manage your payments/product delivery through the internet, no questions asked and no money spent.
Exchange Rate Advantages and Wage Differences
This has more to do with economics and finance, rather than actual competitive advantage, but still has significant cost implications for businesses in the US. One major advantage of conducting your businesses abroad is the strong currency we deal in. For us to do business offshore is far more profitable because we don’t have to spend as much money paying people for their services.
For example,. The average cost of hiring a software engineer in Costa Rica it could be roughly $4700 USD per month. An experienced software developer in the United States makes on average $103,035 in a year. With these numbers you can hire two developers from Costa Rica who have the same skill set.
Can you imagine the amount of work you can get done with four times the manpower compared to the US? The value addition to your company is immense.
1. Access to Technical Skills
Somewhere around the 1990s when the dotcom bubble burst in Santa Clara Valley (also known as the Silicon Valley) and people like Mark Zuckerberg, Bill Gates and Steve Jobs started propping up in conversations, global skill development trends began to shift. South American and South Asian countries had already served as the hub of outsourcing worldwide; starting with call centers that are currently leading the world in technological innovation.
Soon enough, the technological innovation taking place in Silicon Valley and other hubs of tech development began outpacing the skills these people possessed. To keep up with the needs of the market, developers around the world began to refine their skill sets as well.
As the number of offshore development companies increased, the increasing competition and the amount of capital flowing in gave rise to new tech hubs which ironically aren’t concentrated in the United States.
The programmers in these countries have begun matching the abilities of local programmers; you can get in touch with entire development teams who can complete their projects efficiently and effectively.
In addition to the skill, many companies in countries like Costa Rica have intellectual rights over services/products that can help improve your organizational capabilities.
1. Developing Core Competencies
In-house development can take up a lot of your organizational resources. You’re going to have to hire more people, create complex managerial structures to manage your work force, invest a lot of capital to fund your research and much more. This can create inefficiencies in your business which can compromise long-term success.
Nearshore Software Development companies can take on these burdens which have a successively magnified cost effect. If you don’t undertake in-house development, none of the other costs will catch up with you. You can then divert your resources to improving the shortcomings in your organizations that are compromising the profitability of your business.
Why use Nearshore Rather than Offshore?
Working with offshore companies comes with a few drawbacks. The time differences, language differences and the inability to hold service providers accountable for bad service delivery pose a risk that increases as the distance increases. For this reason, many organizations are actually shifting to nearshore outsourcing rather than going completely offshore.
Latin America, especially, provides the perfect candidates to outsource work without any fear of the risks that any other location might present. Some advantages of working in Latin America include:
Overcoming Time Differences
Coordinating activities becomes very difficult if your developers only work when it’s 3AM in the United States. Unless you want to work 24 hours a day (considering that you can’t shut business operations in the morning), you’re going to have a hard time keeping up with your outsourcing company.
This difference can cause communication lapses and coordination problems, which will ultimately compromise service delivery. Working with a nearshore location like Costa Rica, you can find only an hour time difference. Since each of you starts working at roughly the same time, you can get in touch with your workforce at the nearshore location to bring everyone on the same page. As you begin to improve the way you handle your projects, it’s very likely that your nearshore agreements will begin paying off major dividends.
Little to No Language Barriers
The closer you get to countries near yours, the language barriers slowly begin to show up less often. For example, 72% of all Indian developers don’t have a proper grasp of the English language; coordinating work with them can be an absolute nightmare. This won’t be a problem if you’re working with someone in Latin America. Costa Rica, in particular, has a technical sector that’s fluent in English across the board.
Many companies simply set up some of their offices at nearshore locations for the financial advantages they offer, but also because they can directly interact with their technical workforce. This sets them up in a comfortable position, where they can have face-to-face interactions with their service providers. This ease of access to the service providers allows them to maintain quality assurance standards and hold their providers accountable for any mistakes found in the work sent ahead. This is hardly something you can manage if your service providers are in China.
What Software Solutions Can You Expect from Nearshore Firms?
Foreign nearshore software companies offer a full range of software development services; this includes database maintenance, Web/mobile development and many other services. In addition to the comprehensive range of capabilities, these software houses also possess the expertise to present proper solutions.
As an organization looking for offshore software solutions, you can expect the following services to be made available to you:
Web Development and CMS
Web development is a service that includes both front-end and back-end services. Whether you want to create a company website, e-commerce stores or any number of digital commercial entities; these companies have it covered. In recent years, we’ve seen how website performance has become a major determinant of business prospects. Nearshore software houses have developed capabilities that present an immersive online experience to any users that come across your websites.
In addition to these websites, you will also find many service providers offering to create interaction outlets on Content Management Systems. With development expertise in WordPress, Joomla and many other CMS, you can employ these firms to create effective website/content designs.
This is particularly useful for e-commerce providers, who are now part of the largest growing industry in the world. Most of these software houses have well rounded capabilities that can help manage your e-commerce platforms to improve shopping experiences. As your platforms begin to improve, you will find that your sales, revenues and profit potentials are also expanding.
A natural extension of their services as web developers, foreign software developers also a have a fair bit of expertise in website analytics. In a constantly shifting industrial dynamic, businesses have to consistently keep track of how their websites and applications are performing.
In order to assess the effectiveness of their investments and to calculate ROI, analytics can be outsourced to nearshore service providers. You will get a thorough analysis of how your websites are faring in response to new changes and will identify any changes that ought to be made in your existing channels. Based on these reports, you can set standards for best practices and improve the returns from your websites.
In terms of the larger functioning of your organization, these can help identify shortcomings in your online marketing strategies. With insight into your marketing methods and their effectiveness, you can create much more efficient methods of brand exposure.
Mobile Applications Development
As the number of smartphone users increases, businesses are shifting their online platforms to mobile phones. These can include mobile compatible websites, mobile applications and other channels of mobile-based consumer interaction methods. They will also integrate your websites across multiple channels to increase accessibility of your platforms to a large percentage of your client base.
Many foreign software houses have developed specializations in mobile app development, to create responsive and interactive designs. As a business, you stand to gain much from moving your service provision methods to mobile-based channels, to keep up with the shifts in consumer behaviors.
Quality Assurance Testing and Consultancy
Quality assurance is a major consideration for many organizations looking to roll out their Web/computer-based products. The process can be painstaking and can only be undertaken by an objective viewer who thoroughly understands the effects of software performance on user experience. Costa Rican software developers have a niche in product testing, whereby they put any software through rigorous testing to check for any bugs or problems in the system.
In addition to making sure that your products can meet international standards, these teams can also offer advice on the best ways to improve your products. As they identify any shortcomings in the product, they’ll also offer ideas on how to fix the problems. In most cases they will also fix the bugs themselves.
Many of these software houses have also begun handing over entire teams to work on their client’s projects. You can have a contract that binds these teams over to your organizations until a project is completed. In this process, you get access to talent pools without having to hire them into your companies.
This reduces the burden of human resource management which can take a toll on your organization’s performance. It becomes a win-win situation for all the parties involved, where you rent the skills required without concerning yourself with the long-term implications of hiring entire teams.
Nearshore software development services present new opportunities to many businesses in terms of improving their service provision. By taking on much of the financial and managerial burdens associated with software development, they are paving the way for commercial excellence. With the low-cost access to skilled developers in nearby locations, you stand to make immense returns on your investments.
As the logistical barriers associated with finding the right skill set reduce, we will see more people outsourcing their software development projects. As a result, these hubs of technological innovation will continue to offer excellent services to businesses around the world. The cost advantages and the expertise these locations have to offer cannot be ignored. Since these places have easy access, much of the risk associated with going offshore has been mitigated.
In light of these considerations, it would be wise as a business to begin outsourcing your services to these nearshore service providers. As the number of businesses employing nearshore software solution services increase, there’s bound to be an increase in competitiveness that entire industries should prepare for. Latin American countries, in particular, offer great opportunities to businesses since they’re close-by and possess a skilled labor force, well-suited to your tasks.
EX2 Outcoding offers nearshore software solutions to businesses to improve service provision and organizational capabilities. With entire teams of software developers, based in Costa Rica, we offer our clients access to the best talent and full range of software development solutions. Our services include IT Staff Augmentation, Web Development, Mobile Application Development, Microsoft Dynamic solutions and much more.
Get in touch with us today for more information or to hire us for your software development solutions.