Here’s why U.S. businesses outsource their software development teams to Mexico

Get to know what offshoring is, how it can help your business, and what the benefits are. At the same time, compare the benefits of nearshoring vs. offshoring.

Outsourcing means to hire a completely external agency or dedicated team of developers to do the work that you need. It is an agreement between two parties. One party agrees to fulfill a specific job and the other party agrees to pay a determined fee for it. Once the job is done, the contract is finished. In the last couple of years, companies have implemented IT outsourcing techniques to achieve an advantageous position in an increasingly globalized world.

Software development outsourcing services to third parties offers many advantages for U.S. businesses, such as reducing fixed costs or being able to focus on its main activity, by outsourcing secondary activities. It has become a growing trend to subcontract services between developed and less developed countries. IT outsourcing is key among such services, and may essentially be categorized as either software development services or business process services, such as customer care, call centers, and document processing.

U.S. offshoring to Mexico

Mexico is considered one of the most important offshoring/outsourcing destinations in Latin America, followed by Brazil and Argentina. Mexico’s success in the offshoring sector is partly down to the recent economic growth and government policy, which has boosted the confidence of both local and foreign investors. Companies are now comfortable turning to Mexico to obtain key services at significant cost savings. Countries that regard Mexico as a valuable offshoring/outsourcing partner include the United States and Canada, which both have long-established commercial ties with the jurisdiction.

However, offshoring is not without problems. Developing business processes thousands of kilometers away brings with it a risk of loss of control of the company, which translates into a loss of quality in production.

Large legal, time, cultural and even geo-political differences mean that in many cases, we need to invest resources in bridging these differences. The consequence of this is that the benefits that outsourcing brings us are almost imperceptible. In order to avoid these drawbacks, a new strategy called Nearshoring has emerged in recent years.

What advantages does nearshoring offer to U.S. businesses?

Nearshoring is a model of outsourcing of services similar to offshoring, but unlike this, business process outsourcing is carried out with companies from a nearby country (located about a four-hour flight). Thus, by being in a closer space, both parties benefit. Currently, there are many companies that follow a nearshoring strategy when it comes to outsourcing some of their business processes in border countries. Some of its main advantages are:

• Connectivity. In a time when everything is connected it seems that the importance of geographic location is ever the less, but distance and the need to see face to face is still important. Nearshoring allows you to meet with your team in case that you need it. Mexico is just a couple of hours away in flight from any major city in the US or Canada.
• Time Zone Alignment. These as the previous point can seem meaningless but in the long run it makes the difference. Mexico alongside with Canada and the US are in the same region which in place share the same time zone alignment. You can rest easily knowing that your team is working in the same time as you and check on them in real time.
• Cultural Affinity. We are not only located in the same region we also have quite a bit in common. Intersog’s Mexican tech talent speaks fluent English, plus they are also very familiarized with the culture and work ethics of the neighboring countries.
• Intellectual Property Protection (NAFTA). The North American Free Trade Agreement allows our Mexican developers to go through a minimal process to visit your offices in the U.S. for extended periods of time. Also, thanks to the treaty there is a considerable amount of protection in intellectual property rights, contracts and billing.
• Cost – Competitiveness. Latin American developers have been proving that they are equally proficient and competitive in agile software development as the North American’s developers with the main advantage that they cost a fraction of the latter, and in some cases they can cost up to 50% less than their counterparts in the United States or Canada.

Things you should consider before nearshoring your development team

Now that you have seen all the major advantages of hiring a nearshoring team in Mexico, you would want to know how you can do that and what do you need to take into account if you want to outsource your information technology processes.

Here are some points that you should consider:

Hire talented developers from LATAM, Canada, and Europe

1. Only outsource the functions that are critical to your operations, not your strategy. This includes software development and app design.
2. Determine the essential functions of your business and focus on them. The activities that you should consider outsourcing are the one that increase your utility or the secondary ones that allow you to focus on your core activities.
3. Consider the most efficient way to establish your goals and objectives. There is a difference between an in-house team and a nearshore development team. Be clear upon your expectations, use tools like email, phone calls, instant messaging to do this. If you leave out requirements or change them constantly you may be wasting valuable time and money.
4. Develop documentation to share with both your in-house team and your nearshore development partner. This plan should include accountable milestones, testing requirements and expectations of iterations.

Why consider using Intersog as your nearshore partner?

At Intersog, we understand the importance of finding a reliable outsourcing partner. Your partner should make you confident and secure of their understanding about the risks and expectations of your project. They should have the correct capabilities to fulfill your goals and objectives. Intersog backs up these necessities with a quality portfolio of projects and clients, and a reputation that consists of success stories, results and documentation.

Your success becomes ours, and we always work with this in our mind. We take our experience, technologies and methodologies and our expert multidisciplinary teams to make this happen. 

Intersog is always ready to integrate with your team’s culture, competencies and quality requirements to become your ideal nearshore partner.