Nearshore Software Development in Mexico

Nearshore Software Development has been popularized through the past decades when the internet companies started to boom, specially by first world countries such as the USA, the UK, Germany and Sweden. But what is nearshore development and why it has become so popular?

            Nearshore is a term used when a company outsources a process or a complete project (specially in the Information Technology department) to a company that is in a country next or close to it for one or more of the following reasons: cost, closeness, specialization, economical, political, cultural. 

            Because of these reasons, Mexico has positioned as the third world’s largest exporter of IT services in the world and has become the best option for outsourcing software development for companies settled in the United States against countries like India, China and Latin American Countries.         

    Cost

Cost is the main reason why a company would like to outsource a process. Even in the same country, having a department maybe it’s not essential since it can be costly but outsourcing can help reduce costs and taxes. In the case of nearshore software development can represent huge savings for a company. The average national salary per year for a developer in the US is $69,000 while in Mexico is $24,000, that’s almost 65% less, making the cost of developing apps, software, websites and any coding programs lower. 

                       Closeness

In the US case, the ideal would be a Latin American country, specially Mexico, high airplane connectivity, border access and the same time zones, make Mexico the strongest contender for nearshoring. For European countries like Germany, Poland is the best option for this as the Baltics for Scandinavian countries. 

            Specialization

            Talking about IT departments, specialization is very important. What universities are focusing in getting self-learning developers? We all know India is focusing in this to get more offshore development and investment, but are they good enough? México is investing in producing more engineers for the Automotive and the Aerospatiale industries but more recently in the Information Technologies. Universities such as Tecnológico de Monterrey and UNAM in Mexico City are investing on these kinds of educational programs. 

            Economical

            We talked about the impact and importance that is the cost when deciding to offshore but what about the economic situation? Having an economic system that matches the country you want to offshore to is not a must but might come handy, China has become very popular in offshoring even though they call themselves communists. Another aspect here is the fluctuation of the currencies, last year Mexican Peso suffered an incredible depreciation against the US dollar, meaning that offshoring in Mexico had become cheaper for US companies.  

            Political

             The US and Mexico have a great political relation (besides Trump and his wall tension), both countries need each other and altogether with Canada, created one of the best trade agreements. This agreement besides creating facilities to trade, it made a data privacy and intellectual property set of rules to protect it between them and make business easier. This is one of the main reasons the US outsources a lot of processes in Mexico.

           Cultural 

             This is an intangible advantage that companies appreciate but they don’t realize they are doing it. Why? Mexico and the US share very similar working calendar and schedule. We share the same holidays as Christmas and Easter. Imagine its February and you need to complete a project by the end of the month and your offshore company is in China. Your project will never be ready if the Chinese New Year comes in-between. Cultural aspects are something not everyone takes in consideration, until it affects the company. 

            In conclusion Nearshore has become a very accessible tool for companies from any size but this is very helpful for struggling startups who cannot afford a dedicated IT team or they cannot afford to pay a development company to deliver an App or a system to get their startup running. Before deciding is wise to meet the company leaders and teams to get to know if they are a good match for your projects. There are even companies who hand pick employees to work in your projects specially. Connectivity is useful too so cities near the border or with airport connectivity to the US are the best options if you decide to offshore.