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The Future of Nearshore Software Development!

THETECHMUSK by THETECHMUSK
August 20, 2021
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Outsourcing has been in business for a while now. The ease of finding talented and skilled individuals while spending a fraction of money has increased the popularity of this concept. However, along with a lot of butterflies, this concept also came with some drawbacks. Unfortunately, for some these drawbacks became quite prominent and therefore, the search for a proper solution began.

Nearshore Software Development; a concept of nearshore outsourcing became the most perfect answer. Outsourcing from neighboring countries where salaries are not that high gave employers the greatest flexibility. In fact, this quickly became a successful idea.

How did nearshore software development start? 

Ever wonder when the outsourcing concept started? Well, your predictions can be wrong as the start wasn’t any time near. Rather, the initiative took place way before, more than 30 years ago. Once market leaders in the camera industry were having difficulties maintaining their data center. And therefore they thought if any other specialist could take care of it. 

Consequently, another big name was around, and thankfully it was IBM. So, for better performance, Kodal gave its data center management authority to IBM. And the rest is a success story.

After this famous partnership between two giants, other companies were intrigued as well. Furthermore, more and more companies started to outsource their processes. In most cases, IT projects as well as operations were outsourced.

Why wouldn’t this succeed? In recent surveys, it shows that US companies are struggling to find the right skillset in individuals. In fact, there is a significant deficit for employees in the market. If the market is not providing the demand, then outsourcing is the only left way. Consequently, the rise of nearshore software development concepts was also triggered.

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The Problem and the Solution

Initially, when it came to outsourcing, most of the Asia countries came into the spotlight. The level of skill set compared to the requested salaries seems too convincing for any US or European clients. Neither did they ask too much to pay, nor did they lack any skillset. Everything was going smoothly.

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But this was not a fairytale from Disney. In fact the opposite. Problems started to rise, and most prominently communication barriers became too chronic. US or European companies started to have communication problems, as well as controlling and supervision, became less impactful. Even the graph of efficiency started to fall.

Companies wondered, how can they solve this. And the answer came in the shape of Nearshore Software Development. A very effective concept, this system allowed them to reduce the gaps between communication as well as cultural differences.

For example, Mexico is gaining popularity in the US market as a vital outsourcing source. In fact, with the growing number of IT graduates in Mexico, the number of remote workers is increasing. It is expected that the market in Mexico is growing at a rate of 10-20% each year. To give you an idea, this industry is already the 3rd largest export of the country. Now, just guess the sheer size.

The Future of Nearshore model

The future of Nearshore Software Development is bright. In fact, it is brighter than you are expecting. The dramatic increase in the demand for such workers is taking the market by storm. And this time, this storm is one of the biggest ones.

There are several surveys as well as research that has been conducted and the results are astonishing. A very well-known forecast and statistics site Statistica has given an estimation of nearshore outsourcing industry value at an outstanding value of $413.7 billion. In comparison, the recent market value is around $378.1 billion. That’s a $35 billion increase in just a course of 2 years, almost a $17.5 billion addition each year.

In fact, the rise is so prominent that one article by digitaljournal.com claims that US companies will increase the use of nearshore outsourcing. Moreover, the most demanded sectors will be blockchain, the cloud, IoT, and AI. Speaking of AI, according to MarketsandMarkets, this market will reach $190.61 globally. For your reference, the current market value is around $21.46 billion.

The future seems rather exciting for the outsourcers. In fact, this time not only the companies are getting the benefits, rather workers are benefitted too. The increasing competition is increasing the wages as well as work hour rate, therefore, none of the parties are getting exploited.

The Prediction

With the views from some of the vital researchers, there is no way Nearshore Software Development is failing. Rather the increasing demand indicates that this is in fact, a lucrative area for students as well as startups.

Students can get easy jobs with their special skill sets. As nearshore is only focussing on neighboring countries, they don’t need to work at odd hours. Besides, the language remains quite the same, so does the culture. If the country’s local market fails to offer adequate opportunity along with pay, this can be a great solution. 

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On the other hand, companies, mostly startups, can get well-skilled employees at a much affordable rate. Countries like the US or Germany can benefit from this as some of their neighboring countries don’t offer as much pay as they do. So with a discounted salary, they will get similar or in some cases even better-skilled employees. Besides, the deficits of perfect employees in countries like the US will be lessened, as companies don’t need to rely on local offerings.

Chiefly, the predictions are extremely positive, where a win-win situation is present for both parties. This not only will aid them, rather aid the economy of each party’s countries.

Final Verdict

What nearshore software development is offering to the parties is impeccable. Consequently, this time, not only one party is getting the benefits. Rather, both the employers as well as the employee are getting the fruit of this popular concept.

Where companies are happy with employees with similar cultures, employees are sensing the same. This time the cost is controlled as well as the performance. Hence, the rise of popularity. Besides, the future is indicating the exact.

With the rising number of companies as well as graduates, the concept will grow more. In fact, in the near future this can be an industry leader, and this time this is quite possible. 

Tags: Nearshore Software DevelopmentSoftware Development

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