Collaboration vs. Location
Nearshore is the main topic of conversation in the IT Outsourcing industry.
The term “Nearshore” naturally brings your attention to the location of the outsourcing firm. This would lead you to believe that ‘nearness’ of the firm in geography to the client directly relates to a quality experience.
But is this really true?
All too often, software development outsourcing providers try to “throw people at projects”, bringing in 7-10 developers or more to show development capacity and confidence towards completing the project. This is particularly common among traditional, large outsourcing firms based in India; but it is a common practice that exists worldwide.
Furthermore, these large teams are often comprised of skilled developers but they do not have the ability to understand the product from a ‘Product Lead’ perspective, and certainly not a visual design one. Small, focused teams that have a deep understanding of the complete project deliverables (the platforms, the product or service, design, end-use, industry use) seem to be much more effective.
Successfully collaborating Nearshore is not only about efficiently developing technology, but also using it to communicate and internally allocate resources according to the client’s needs. Using effective resource management tools allow Nearshore firms to verify work or scale up/scale down resources with ease, in-turn delivering on deadline promises routinely passed down to clients.
What makes South America more equipped to provide smaller, more effective teams?
One simple answer is related to culture.
Developing quality IT applications requires an understanding of the client’s business with actual depth. A depth only achieved by complex questions and corresponding conversations:
- Which functionality is most important to the end user?
- What priorities are most important on the front-end but not so important on the back-end?
- To what precise degree is one individual module dependent on the other?
- Which technology or environment or hosting platform make sense for a certain purpose (scalability, usability, fast growth, etc.)?
These are simple but ‘heavy’ questions, that require significant feedback and a multitude of ideas to be exchanged before coming to a conclusion. These questions aren’t cultural on the service – but inherently they are cultural.
You might think, anyone who can speak English can effectively understand and execute based on these simple questions. Surely a knowledgeable person from India or Asia who speaks English could understand and converse without any issues.
Just because you can speak English, does not mean you can intuitively understand and convincingly sell ideas to colleagues and customers in the US.
In South America, the open and relationship-based style of doing business is very similar to the US, in addition to 84% of the IT sector speaking English.
Another factor enabling South American Nearshore teams to be well-equipped is creativity.
When it comes to creative subjects in a software development environment like UI/UX, many times the Latinos are the ones leading the conversation.
Latin Americans are some of the most creative people in the world [Global Prosperity Index, 2015]. Although you can certainly research this and mull over the ‘statistics’; it’s something you really have to experience to understand.
Here is a relatable example from an office environment:
If you have a creative idea in a US-based office — maybe you have a web design effect for the website that you want feedback on – usually, you are limited to one or maybe two people in a specific function (the weird graphic designer you ignore in the hallway, most likely). At an office in South America, the CTO, the sales guy, or even any other engineer could likely answer your question. You can even expect to hear something meaningful from a design perspective like, “it’s good, but it kind of distracts the eyes from the text. And it makes me feel like this is a very important page on the website, but it isn’t.”
Timezone, Cost remain large factors
The ‘near’ aspect of nearshore isn’t totally fueled by hype.
There is value in a significantly shorter travel time when collaborating with clients. All executives realize the value of shaving a few (or more) hours off flights to maintain relationships. Ten hour flights drain much needed energy and aren’t a scalable way to do something as routine as checking in with a client.
The biggest – and potentially only – nearshore advantage related to geography is the similar timezone.
Providing, eliciting, and responding to feedback is of utmost importance in complex development projects with tight deadlines. It doesn’t seem like a big issue at the onset, but missed meetings and delayed responses are inevitable if consistent availability during your normal working hours isn’t an option.
Think about it, isn’t it hard enough to meet with somebody external when they aren’t on your calendar, in your own timezone?
As these nearshore providers meetings become more popular, value – not cost – will continue to be the common theme in Outsourcing.
Value is the driving factor in booting out culturally disconnected offshore companies from the market.
It’s still no secret to anyone that access to local technical talent is very expensive.
Going all the way back to the early 1980s, businesses have traditionally outsourced specific, relatively non-strategic functions overseas. The reason then, and part of the reason now – is to increase profitability via significantly cutting development costs. Although technology has allowed corporations to cut cost in a multitude of ways, at the end of the day, major corporations still need to maximize profits in order to please shareholders and scale quickly.
Today the technological landscape changes at the speed of light. Disruption in the form of cloud-based services is by no means a tipping point in immediate change. Changes inevitably cost money, which cost-effective but knowledgeable and focused Nearshore teams make less painful.
Nearshore is now an innovation enabler
As just previously mentioned, Outsourcing itself is making its way to from non-strategic to strategic functions. Businesses are gaining new competitive advantages from working with outsourcing firms with broad service capabilities, according to Deloitte’s 2016 Global Outsourcing study, which surveyed business executives across more than two dozen industries in the Americas, Europe and Asia.
As businesses receive more and more value from outsourcing providers, value will likely be measured by how the provider helps empower business growth through innovation – not simply cutting costs.
“With more respondents viewing service providers as key business enablers, service providers are becoming purveyors of innovation and enabling transformation rather than just providing a source of price arbitrage,” a Deloitte survey noted.
Additionally, respondents say that innovation is a key component of the value derived from an outsourcing relationship.
Nearshore is mostly commonly evolving as an innovation center by:
- Solving Capacity Issues by accessing unique skill-sets
- Creating Global Scalability through cost-effectiveness and speed
- Providing Access to Intellectual Capital for improving user experience and quality
As technical and creative knowledge is increasingly crucial, monumental and timely improvements can be made in companies via Outsourcing. Improvements that wouldn’t have a chance at being possible beforehand.
We are on the verge of an entirely new model of service delivery comprising robotic and cognitive process automation, IoT, and digital IT management. This intersection of traditional outsourcing and the innovation storm could amplify value for those organizations that can correctly harness it, and this will likely lead to ever increasing uses of outsourcing, even as it reinvents itself.
Latin America, the most creative region of the world, is perfectly positioned to capitalize on the opportunity to help US-based companies innovate with beautiful software.