Nearshore Outsourcing – The Full Picture In 2020

nearshore outsourcing

Outsourcing of business processes first started in the year 1989. Since then, it has become a widely implemented practice that allows companies to optimize their spending while streamlining their operations. Research by Deloitte illustrates that 59% of companies that outsource can effectively cut their costs, thus improving bottom lines. Of the various outsourcing methods, nearshore outsourcing has seen phenomenal growth over the last few years.

In a way, it can be said that this particular outsourcing model has revolutionized the way US-based companies develop their software products. Nearshore outsourcing allows businesses to overcome the challenges of offshoring to a distant country. Teams can collaborate better because of the similarities of time zones and cultural affinities, thus resulting in lesser time to market.

But what is the future of nearshore outsourcing? Will the companies in the US have better access to software development talent and infrastructure in this new decade? As of 2020, Statista reports that in the US alone, the market size of the outsourcing industry is a whopping $132.9 billion and this number is expected to grow by 1.6% this year. Hence, it can be well imagined that outsourcing is here to stay and flourish further.

In this article, we take a detailed look at 6 nearshore outsourcing trends for 2021 and understand what the future holds for this model.

1. Innovation Will Lead Nearshore Outsourcing

Innovation is the cornerstone of business success in today’s world.  A Gartner report states that the top drivers for innovation are better customer experience (53%), improved revenue growth (53%), and developing new services and products (45%). As one can imagine, all these factors collectively contribute to an organization’s enduring success.

The world of nearshore outsourcing is no different. In 2021, the outsourcing industry will see massive improvements in developing cutting-edge solutions and services as well as fostering a culture of innovation.

Countries like Colombia and Mexico, which are pertinent nearshoring locations for US-based firms, are already taking the lead in this aspect. From the latest infrastructure to technologies, these countries are creating an environment of overall growth. Latin American nations are especially ahead in this area. Many introduced several pertinent reforms that ease business regulations.

2. Focus on Service Quality

Quality of services is becoming increasingly important in today’s world of commerce. Software companies are approaching nearshore outsourcing from a more holistic performance perspective, instead of just a means of getting services.

As a result, outsourcing vendors must develop commensurate capabilities and skills that will be more in demand. Since most time-and-material outsourcing contracts pay vendors solely based on the resources and hours spent, quality optimization will become a necessity.

So, when it comes to nearshore outsourcing in 2021, the onus will be on the partners to provide comprehensive software development services. Teams will be expected to work with greater collaboration to produce value-driven results.

3. Introduction of Cutting-Edge Technologies

The demand for technologies like Artificial Intelligence, the Internet of Things, Blockchain, and Machine Learning is rapidly growing.  According to analysts at Statista, the global IoT market will bring in a revenue of a massive $1.6 trillion by 2025. And MarketsandMarkets has predicted that the AI market will reach $190.61 trillion by 2025. Countries like Canada and Mexico have already invested in the research and development of these latest technologies. This will have a significant impact on nearshore outsourcing for US companies, especially for software jobs.

Businesses now implement these technologies and solutions to create robust products. For example, Blockchain creates popular, secure software solutions. In most cases, businesses nearshore these jobs to outsourcing vendors. That way, companies get the service without having to hire new talent and training them.

So, a rise in the use of these cutting-edge technologies will have an impact on the overall nearshore outsourcing jobs in 2021.

4. Importance of Cybersecurity

Cybersecurity is one of the foremost pain points for many businesses. Did you know that a phishing attack takes place every 39 seconds? Small and medium-sized organizations are more prone to this threat. Hence, having a robust cybersecurity system in place is of utmost importance for businesses.

However, almost 70% of companies do not have the inbuilt capabilities for handling these cybersecurity threats. That is where nearshore outsourcing is becoming increasingly important to businesses.

In 2020 and the coming year, businesses are predicted to outsource their cybersecurity procedures to nearshore vendors. This will allow them to have real-time monitoring by SMEs while managing their costs and time efficiently. Businesses can reduce their threat and chances of losing invaluable data with nearshore outsourcing.

5. Rise in Cloud Sourcing

Companies worldwide have already adopted cloud platforms for storing their data. Gartner’s revenue forecasts that the entire cloud market is going to be worth $289.1 billion by 2021!

More than 93% of companies globally are considering adopting cloud services for better outsourcing, or they have already done so. Cloud solutions and platforms allow companies to store their sensitive data securely and efficiently. In the majority of these cases, companies outsource these services. With a rise in nearshore outsourcing in the future, cloud sourcing will become the norm in 2021.

6. New Regions and Autonomous Teams

The rise of new nearshoring locations in Latin America is going to drive the market the next year. One country that particularly stands out with its latest capability development is Columbia. Columbia has passed some major reforms that aim at making it easier to start a business there, simplifying cross-border trading and insolvency resolution.

woman-wearing-headset-sitting-in-office-chair-at-desk-with-computer-monitor

Another aspect that makes nearshore outsourcing the preferred model for the future is the autonomy of the teams. For years, nearshore teams have been working closely with their US counterparts to develop quality products. As a result, they have become more agile, innovative, creative, and capable of performing with minimal guidance. Hence, 2020 and 2021 will see the rise of autonomous teams.

The rise in team autonomy means that parent companies will have to spend less time in training and guiding their vendors. This is a unique feature for nearshore outsourcing and is not usually seen with offshoring. In offshoring, since there are considerable time differences and gaps in cultural similarities, this kind of autonomy is hard to achieve.

We Can Help You with Nearshore Outsourcing!

Nearshore outsourcing is touted to see big growth in this decade. With more companies streamlining operations without compromising on product quality, nearshore outsourcing is gaining popularity as a viable option. It is not only cost-effective but also provides ease of doing business due to geographical and cultural proximity. For companies in the US, nearshore outsourcing can also help them enter foreign marketplaces and become more competitive as a global brand.

However, for most organizations, the challenge lies in selecting the right nearshore vendor to partner with. That is where professional services like ParallelStaff comes in to provide help.

We have taken time to understand the needs of companies and have developed specific solutions that can help you with your requirements regarding talent acquisition, retention, and software development. Our Nearshore Solutions are particularly designed to help your company tap into the highly-skilled and diverse American talent pool.

If you are looking to implement nearshore software development in your organization or want to know more about the model, then do not hesitate to contact us for more details.

Mike Hernandez

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