Outsourcing has become a common practice for companies in the United States as a way to save money by contracting work to an outside company overseas.
A US company can save money by paying lower wages to overseas employees and reducing the cost of overhead.
Software development companies may need to look outside their own borders to attract the talent needed to complete projects.
The top countries for outsourcing have generally been in Asia, including India, China, Malaysia and Thailand.
However, companies in the United States are beginning to see the benefits of outsourcing to countries closer to the border in Latin America.
Nearshoring is the term that refers to outsourcing to a country near the original company's country, for the United States, this typically refers to countries in Latin America.
One of the greatest advantages of nearshoring is allowing both countries to work in the same time zone.
The two companies can collaborate much easier on a project when they are working at the same time, allowing for email to be answered immediately and videoconferencing.
Countries that share close border also tend share similar cultures, languages and political systems.
If your company is considering outsourcing, or changing from a system of outsourcing from a distant country, there a few things you should know before nearshoring to Latin America.
1) Nearshoring saves money Companies have traditionally outsourced to a country that saves them the most money.
This is usually based on employee wages and overhead.
However, while the cost per worker per hour may be higher in Latin American countries, the other benefits actually lower the overall cost of outsourcing nearshore.
Working in the same time zone increases communication and reduces the amount of mistakes.
Projects can be completed faster and the company does not have to pay to fix mistakes from miscommunication.
The reduction in language barriers and different cultures allows for fewer mistakes.
Most software developers in Latin America must learn to at least read and write in English in order to attend university.
2) Latin Americans are competent to do the work required Countries in Latin America have seen a high growth in the number of IT graduates in recent years and they are producing well-trained software engineers.
There are an estimated 1.
7 million IT professionals working in Brazil today.
Argentina has more than 100 undergraduate and graduate programs with more than 120,000 students enrolled in information technology programs.
The employees contracted to work are capable of handing the work software development companies in the United States require from them.
3) Political situation in nearshore countries is stable Latin American countries where nearshoring is popular have stable political systems and economies.
Countries like Costa Rica, Brazil, and Argentina are very stable democratic societies with growing economies.
Work will not be interrupted due to political differences with the United States or instability within the country.
While some countries in Latin America are still facing political strife, including Venezuela, they do not affect the productivity of companies in other countries.
The risk of working in these countries is very low.
4) Nearshoring to Latin America is already popular Latin America is growing in popularity as an outsourcing destination for US companies due to the skill level of the information technology sector.
Latin America is the 3rd most common region for outsourcing from the US.
Proctor and Gamble and Intel both have large investments in outsourcing in Costa Rica.
5) Latin America nearshoring allows for easy agile development Agile software development is a strategy based on developing software in small increments to ensure the client is receiving the best possible product.
Agile development relies heavily on communication between the client and the software developers.
Agile development allows for changes to be made to the original requirements throughout the development process, allowing for the changing requirements of the client and the changing atmosphere of the software development world.
Nearshoring enables better communication due to working in the same time zone and similar languages, which enables agile development to succeed in Latin American countries.
A US company can save money by paying lower wages to overseas employees and reducing the cost of overhead.
Software development companies may need to look outside their own borders to attract the talent needed to complete projects.
The top countries for outsourcing have generally been in Asia, including India, China, Malaysia and Thailand.
However, companies in the United States are beginning to see the benefits of outsourcing to countries closer to the border in Latin America.
Nearshoring is the term that refers to outsourcing to a country near the original company's country, for the United States, this typically refers to countries in Latin America.
One of the greatest advantages of nearshoring is allowing both countries to work in the same time zone.
The two companies can collaborate much easier on a project when they are working at the same time, allowing for email to be answered immediately and videoconferencing.
Countries that share close border also tend share similar cultures, languages and political systems.
If your company is considering outsourcing, or changing from a system of outsourcing from a distant country, there a few things you should know before nearshoring to Latin America.
1) Nearshoring saves money Companies have traditionally outsourced to a country that saves them the most money.
This is usually based on employee wages and overhead.
However, while the cost per worker per hour may be higher in Latin American countries, the other benefits actually lower the overall cost of outsourcing nearshore.
Working in the same time zone increases communication and reduces the amount of mistakes.
Projects can be completed faster and the company does not have to pay to fix mistakes from miscommunication.
The reduction in language barriers and different cultures allows for fewer mistakes.
Most software developers in Latin America must learn to at least read and write in English in order to attend university.
2) Latin Americans are competent to do the work required Countries in Latin America have seen a high growth in the number of IT graduates in recent years and they are producing well-trained software engineers.
There are an estimated 1.
7 million IT professionals working in Brazil today.
Argentina has more than 100 undergraduate and graduate programs with more than 120,000 students enrolled in information technology programs.
The employees contracted to work are capable of handing the work software development companies in the United States require from them.
3) Political situation in nearshore countries is stable Latin American countries where nearshoring is popular have stable political systems and economies.
Countries like Costa Rica, Brazil, and Argentina are very stable democratic societies with growing economies.
Work will not be interrupted due to political differences with the United States or instability within the country.
While some countries in Latin America are still facing political strife, including Venezuela, they do not affect the productivity of companies in other countries.
The risk of working in these countries is very low.
4) Nearshoring to Latin America is already popular Latin America is growing in popularity as an outsourcing destination for US companies due to the skill level of the information technology sector.
Latin America is the 3rd most common region for outsourcing from the US.
Proctor and Gamble and Intel both have large investments in outsourcing in Costa Rica.
5) Latin America nearshoring allows for easy agile development Agile software development is a strategy based on developing software in small increments to ensure the client is receiving the best possible product.
Agile development relies heavily on communication between the client and the software developers.
Agile development allows for changes to be made to the original requirements throughout the development process, allowing for the changing requirements of the client and the changing atmosphere of the software development world.
Nearshoring enables better communication due to working in the same time zone and similar languages, which enables agile development to succeed in Latin American countries.
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