Nearshore Software Development I Outsourcing Guide For 2021

Nearshore Software Development I Outsourcing Guide For 2021

Print and mail outsourcing is the outsourcing of document printing and distribution. In the US, American clients nearshore to Canada and Mexico, Offshore Software Development as well as to many nations in Central and South America. Victims can lodge a criminal complaint against the CEO of the suppliers and clients.

Security activities inside the company are reflected in a knowledge of the latest field updates, regular vulnerability scans, strict security procedures inside the work done by teams, and use of the latest software. Although the United States leads the world in innovation, the country also features the highest salary rates that drive entrepreneurs to search for a cheaper workforce via nearshore programming services. Since most traditional businesses are embracing digital change, nearshore outsourcing has become a business model on the rise. The technological focus in Mexico is on infrastructure and information security .NET and MySQL are commonly used programming languages here, as are Java, LAMP, and mobile application development. We try to resist the temptation to evaluate outsourcing options on price only because the lowest price option isn’t always the lowest cost option. Low price vendors often end up costing you a fortune; either because you end up having to re-do their shoddy work, or because they nickel and dime you to death with change orders after they’ve won the initial bid.

When it comes to the Eastern European market, the concentration of specialists is also high. According to the top IT-statistics resource in Ukraine,, this meant 150K+ software developers in 2019. The table below shows the average hourly rates in key IT outsourcing destinations in relation to the position. Local markets sometimes suffer from a lack of talent, have a need to cut operational costs, can reduce expenditures on IT departments, etc. In these situations, nearshore development is the best solution to bridge the gaps.

  • Always check if the staff is fluent in English or whichever language you prefer.
  • Obama met with representatives of companies such as Otis Elevator, Apple, DuPont, Master Lock, all of which had recently brought jobs back or made significant investments in the United States.
  • A good offshore software developer will have a strong portfolio of previous projects.
  • The impact of offshore outsourcing, according to two estimates published by The Economist showed unequal effect during the period studied 2004 to 2015, ranging from 150,000 to as high as 300,000 jobs lost per year.

Operating at many locations throughout the world 24 hours a day, seven days a week boosts productivity. There are various reasons why India is the chosen outsourcing location, not merely the quality of IT services offered or the cost. In this article, I’ve created a list of reasons why outsourcing software development or any other IT service to India should still be on your radar. Although several countries continue to compete in value-driven outsourced software development services, such as Bulgaria and Ukraine, India consistently outperforms the competition in terms of cost and quality. If you consider outsourcing to LatAm, it makes no difference with offshore software development in Eastern Europe.

Management Processes

These remote work positions may be customer-facing or back office, and the workers may be employees or independent contractors. Insourcing entails bringing processes handled by third-party firms in-house, and is sometimes accomplished via vertical integration. Is the practice of hiring an external organization to perform some business functions (“Outsourcing”) in a country other than the one where the products or services are actually performed, developed or manufactured (“Offshore”). Lauren Soucy is the VP of Marketing for Time Doctor, the world’s leading time tracking and productivity software.

As well, the same source states that the top 50 IT companies open about 5,000 positions monthly. Moreover, about 30 of the best Ukrainian universities accept about 20K students who desire to study informational technology annually. When considering nearshore, as well as offshore programming, face to face meetings are essential for the successful completion of projects. In the United States, the median software developer receives an annual salary of $81,195. It’s hard enough to choose between software companies based on their merits, but it’s even harder to choose between… China is currently concentrating its efforts on the development of the information technology sector.

Considered a leader in the industry of software development outsourcing. Brazil is highly regarded by Kearney, and it is in the top five of the 2021 Global Services Location Index. According to Brasscom, Brazil has approximately 1.6 million IT workers by the end of 2021, a 3.3 percent rise from March 2021.

Reduced security, sometimes related to lower loyalty may occur, even when “outsourced” staff change their legal status but not their desk. While security and compliance issues are supposed to be addressed through the contract between the client and the suppliers, fraud cases have been reported. Co-sourcing is a hybrid of internal staff supplemented by an external service provider. Co-sourcing can minimize sourcing risks, increase transparency, clarity and lend toward better control than fully outsourced. While U.S. companies do not outsource to reduce high top level executive or managerial costs, they primarily outsource to reduce peripheral and “non-core” business expenses.

Outsourcing has gone through many iterations and reinventions, and some outsourcing contracts have been partially or fully reversed. Often the reason is to maintain control of critical production or competencies, and insourcing is used to reduce costs of taxes, labor and transportation. Public opinion in the US and other Western powers opposing outsourcing was particularly strengthened by the drastic increase in unemployment as a result of the 2007–2008 financial crisis. From 2000 to 2010, the US experienced a net loss of 687,000 jobs due to outsourcing, primarily in the computers and electronics sector. Public disenchantment with outsourcing has not only stirred political responses, as seen in the 2012 US presidential campaigns, but it has also made companies more reluctant to outsource or offshore jobs.

#4 Time Zone Advantage

These factors may influence the nearshore outsourcing experience firmly. This is true especially if you are based in the USA and your team is located in Eastern Europe. The team can provide you with the necessary adjustments the next morning.

Localization, the process of manufacturing products for the local market, is an approach to keeping some manufacturing offshore and bringing some of it back. Besides the cost savings of manufacturing closer to the market, the lead time for adapting to changes in the market is faster. Outsourcing results from an internationalization of labor markets as more tasks become tradable.

offshore software development statistics

Clients benefit from remote work, reduced office space, management salary, and employee benefits as these individuals are independent contractors. For example, don’t try to tell offshore software developers which tools to use during product development; they have the experience to know what best fits the situation. When you hire an offshore software development company, forming a team to handle software development isn’t your concern anymore.

Statistics To Consider While Outsourcing Software Development To India

While much of this work is the “bread and butter” of specialized departments within advertising agencies, sometimes specialist are used, such as when The Guardian outsourced most of its marketing design in May 2010. Some counterclaim that the actual taxes paid by US corporations may be considerably lower than “official” rates due to the use of tax loopholes, tax havens, and “gaming the system”. Although outsourcing can influence environmental de-regulatory trends, the added cost of preventing pollution does not majorly determine trade flows or industrialization. Similarly, since the signing of NAFTA, heavy industries have increasingly moved to the US which has a comparative advantage due to its abundant presence of capital and well-developed technology.

offshore software development statistics

The time difference between the United States and Vietnam is the same as China’s – roughly 12 hours difference from the US West Coast, which causes the same challenges as it does for other Asian countries. BPO vendor charges are project-based or fee-for-service, using business models such as Remote In-Sourcing or similar software development and outsourcing models. This can help a company to become more flexible by transforming fixed into variable costs. A variable cost structure helps a company responding to changes in required capacity and does not require a company to invest in assets, thereby making the company more flexible. An ideal offshore software development partner should have a workforce of the best software developers in their region.

India has a high level of English proficiency and now has more than 5 million software engineers. In addition, the man-hour cost is relatively inexpensive, ranging from $18 to $40 per hour. This makes India perhaps the lowest price among the major outsourcing destinations. However, as previously discussed, low cost always carries the danger of lower-than-expected completed product quality. Furthermore, the time difference between the United States and India is around ten hours, which can cause communication issues unless there is a clear mitigation plan. The guide is based on industry research and our 10+ years of software development experience.

Wide Variety Of Services

AI, Big Data, IoT, Cloud, and Mobility because of its varied pool of software engineers. More than 40% of the IT workers will be trained in the in-demand technological stack in the next four years to satisfy the industry’s advanced requirements.

offshore software development statistics

The time difference between the Eastern United States and Ukraine is around 7 hours, which provides SOME overlap in the business day, and Ukrainian developers are used to working later hours to provide some additional support. This puts them at an advantage to Asian firms, particularly for Western European clients. Look for countries with a high number of software development firms that have worked on similar projects to yours. Finding the ideal team for your project will be easier if you are in a country with a large pool of diverse IT expertise. Supply chain management with effective use of supply chain partners and business process outsourcing can increase the speed of several business processes. Constraints imposed by time zones can complicate communication; near-sourcing or nearshoring offers a solution.

For example, even though the average offshore software development rates in Asia are around $30 per person per hour, the best offshoring companies in Asia can easily charge twice that amount. We’ll cover what offshore software development companies are, why you should consider offshore developers, and how to select a good one. Many major technology companies, including IBM, Microsoft, Nokia, Ericsson, and HP, have collaborated with local outsourcing firms. Furthermore, major multinational corporations have developed numerous R&D centers in Hungary. As a result, as compared to other Eastern European countries, IT specialists in Hungary have higher rates.

Things To Look For In An Offshore Software Development Company

While the number of technically skilled labor grows in India, Indian offshore companies are increasingly tapping into the skilled labor already available in Eastern Europe to better address the needs of the Western European R&D market. Identity management co-sourcing is when on-site hardware interacts with outside identity services. Knowledge services, including engineering support, product design, research and development, and analytics. Kodak’s 1989 “outsourcing most of its information technology systems” was followed by others during the 1990s.

Your nearshore software development vendor is literate in applying effective development methodologies like Agile and Scrum. Offshore and nearshore software development accumulates numerous benefits, including budget savings and an abundance of talented specialists. The following infographic presents the top offshore and nearshore development regions, key insights, and statistics regarding outsourcing IT activities. Offshore software development services are delivered from distant locales.

By contrast, executive pay in the United States in 2007, which could exceed 400 times more than average workers — a gap 20 times bigger than it was in 1965 is not a factor. Two organizations may enter into a contractual agreement involving an exchange of services, expertise, and payments. Outsourcing is said to help firms to perform well in their core competencies, fuel innovation, and mitigate a shortage of skill or expertise in the areas where they want to outsource. Outsourcing can offer greater budget flexibility and control by allowing organizations to pay for the services and business functions they need, when they need them. It is often perceived to reduce hiring and training specialized staff, to make available specialized expertise, and to decrease capital, operating expenses, and risk.

Kinds Of bad Apples In Business And How They Harm Us All

Python, Shell, Ruby, Java, and PHP are the most popular programming languages in Poland. There are almost 5.5 million professional software developers in the former Soviet bloc. Costwise, Eastern Europe’s hourly fees are, on average, similar to costs in Asia. However, there is quite a large range–, averaging more than $40 per hour in Hungary, $25-$46 in Ukraine, and $40–$56 per hour in Poland.

This information will definitely help you with your business objectives. Pay attention to the company’s ranking -you can find a lot of statistics through services like HackerRank and GoodFirms. You can also get great insight into companies outsourcing software development on Clutch.

#2 The English Language Advantage

According to Kearney, about half of the top 500 global firms have formed alliances with India. In the software development technology industry, four out of every ten IT work in India. With over 15 million developers, Asia is the region with the most software developers in the world.

Whatever payment option you choose, be aware that all of them are subject to specific fees and are limited by terms. For example, PayPal transfers are subject to a 2.9% fee for orders originating in the US, and 4.4% fees for orders outside the US. Credit card payments are limited to $5,000 per transaction, and wire transfers have a special extra payment from ($30-$50). When it comes to invoicing, you may execute payment through the following options like bank transactions, services like PayPal or Payoneer, Wire transfer, via financial agreement between two parties of a contract . For example, countries like the United States and Canada are great when working together as they share common cultural attributes and have similar levels of individualism. The collaboration with your IT-vendor is free from fraudulent risks, and you have proof of that in the form of legal documents, like NDA agreements.

Mohamed Ghazwan