The Nearshore Lowdown: What Is Nearshoring?

The modern work landscape looks vastly different than it did a couple years ago, especially for the technology industry. Different companies are tackling certain challenges—talent shortages, high rates, communication barriers—and leveraging new advantages—improved technologies, a broader talent pool, and employee satisfaction made possible by remote work.

As your company seeks to meet its project and revenue goals, your tech department plays a key part in making this happen. So what do you do when your tech team is tackling urgent projects but needs increased resources in order to deliver on time? The answer could be nearshore staff augmentation.

“Nearshore staff augmentation”—that’s a mouthful! To explain what this new work model is, let’s explore a scenario.

The Problem

Your in-house tech team is unable to meet your company’s goals in the desired timeframe, either due to being understaffed, not having adequate time to hire new talent, or lacking the budget to expand. But without these gains from the tech team, your company’s growth is stalling.

Before weighing your options, you have one advantage and a few constraints to consider.

First, your prime advantage: you’re open to staff working remotely. With the rise of remote work, we’ve seen massive increases in productivity, work quality, and profit margins. This has the added benefit of allowing you to consider candidates who work in another region, far from the brick-and-mortar office.

Your company’s current situation also comes with a couple restraints: you don’t have a lot of time to find and vet candidates, and your budget is limited. How can you find…

  • highly qualified tech developers…
  • who will integrate well with your existing team…
  • and whose rates will allow you to stay within budget?

These factors will help you evaluate possible courses of action. Let’s explore those options.

The Traditional Option: Hiring Domestically

First you consider finding contractors in your general area. But there are two problems with this: the talent shortage and high rates.

In the United States, tech developers are currently in very high demand and dismally low supply. With the current talent shortage, the hiring market is reckoning with 85 million unfilled positions, with the tech industry especially impacted.

So finding candidates is already a challenge, but it’s even more of a hurdle when you consider your company’s unique needs! What coding languages would the dev need to be proficient in? What additional credentials would you like them to have? These factors narrow your search pool even more.

And on top of that, even if you find a candidate whose qualifications are a perfect fit for your team, their rates will likely be high. According to Hired’s 2021 State of Tech Salaries survey, the average base salary for a tech worker in the US is $152,000. That’s $73 an hour, and it doesn’t account for benefits, overtime, stock options, or other compensation.

The Traditional Alternative: Outsourcing

Since US tech devs are in low supply, and even if you did find one their rate could be out of budget, you consider outsourcing one of your tech department’s projects to an external team, located in a different part of the globe. Doing this would help you access a larger talent pool and get the work done with significant cost savings.

But wait—you have colleagues from other companies who have tried this, and it's backfired. With huge time zone differences, cultural friction, and communication mishaps galore, you second-guess the option to outsource. You don't want to hand over a project in its entirety to an external team. The work's quality can’t be left up to chance, and you don't want to deal with communication delays between your in-house team and the external project manager.

The Modern Solution: Staff Augmentation

With the traditional outsourcing model being too much of a risk, what can you do? In circumstances like this, consider a staff augmentation model.

Staff augmentation is an outsourcing strategy that supplements an existing team with additional members who can help build new products, provide specialist services, or offer more general support and capacity. This is a new form of outsourcing that integrates external contractors into your existing in-house team. You directly oversee operations and workflows; no relying on an unfamiliar, external project manager to get things done right!

So let’s say you're interested in pursuing staff augmentation services—that will still give you access to a larger talent pool at more reasonable rates, but without the setbacks of traditional outsourcing. Great! But now you need to assess what type of staff augmentation best suits your company’s needs.

Onshore Staffing

You could find contractors to work in an onshore capacity. These workers would be located in your same country, so you’d have similar time zones and work hours. Thanks to this, communication barriers would be insubstantial.

Expectations about professionalism and work culture would be in sync between these US contractors and your in-house team. However, these domestic contractors are going to come with high rates, and your company might not have the budget for that.

Offshore Staffing

On the other hand, you could find software developers who are offshore, located on a different continent. Their work will come at a reasonable rate! But once again, significant time zone differences, clashing cultural expectations, and communication delays could hold your tech team back.

Nearshore Staffing

When you exclude onshore and offshore models, what other options are there? Nearshore staff augmentation (or nearshore outsourcing) can be a great solution for many businesses looking to grow their teams. Nearshore contractors are located in nearby countries—somewhere in Latin America, typically—and therefore are easily compatible with your internal team’s work hours. No communication delays!

Plus, Latin American expectations around professionalism are very similar to those of the US. And these contractors tend to offer reasonable rates, so you can rest easy knowing that your tech team expenditures are within budget. Problem solved!

Takeaways

Nearshore staff augmentation might be a newer concept, but it's the future of tech work. It allows in-house managers to directly supervise remote contractors working from a compatible time zone at reasonable rates. With these benefits of nearshore staff augmentation, companies like McGraw Hill, Disney, Repair Pricer, and NBC have seen incredible growth, crushing their goals and gaining a great ROI.

Want to see a more detailed breakdown between nearshore, onshore, and offshore staffing models? Next week we’ll share a guide on how to figure out which solution is the best fit for your company.

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