From India to Nearshore: Getting it Right

The India IT offshoring model has been under stress for several years, but what are the real factors leading to Nearshore being a better alternative?

India

Over the years, India has proven itself able to deliver on a wide range of outsourcing projects, from BPO to advanced software development. But it has struggled to straddle the geographic and cultural divide, and this has opened opportunities for Nearshore providers, particularly given the demands of the digital economy.

Today, software development is happening at a much faster pace, requiring closer collaboration among teams. Whereas in the past software development projects required team meetings once every week or two, but today there is a need for daily interactions.

Scrum development calls for daily stand-up meetings and that’s a big problem if your development team is on the other side of the world in a completely different time zone. Most efforts to match working hours only results in decreased productivity.

Any move brings some pain, and it’s important to assess the overall value proposition of Nearshore versus India. If your development team is in India with all daily interactions happening within those teams, and only the project managers are in the United States which need updates every week or two, then there is less reason to move.

However, if you have development and/or QA teams closer to a 50/50 split between US and India, needing regular interactions, then Nearshore Development screams for attention.  Additionally, any outsourcing opportunity needs to address cost. Salaries and infrastructure costs have been in rising in India, which erodes the overall value proposition.

Labor arbitrage is not the sole consideration when planning to outsource, but inflationary pressure and a tighter labor market can create in more volatility and turnover. Resource stability within teams is absolutely critical and outsourcing companies in India are facing the challenge to have employees stick around after they’ve learned processes, and have become more productive.

Nearshore also provides strong protection for Intellectual property (IP), which can be a concern in India, particularly if a company is working on a project designed to give it a unique competitive edge.

Companies using Nearshore providers in Mexico have the advantage of NAFTA, with the proposed USMCA updating and strengthening IP protection.

Migrating from India to Nearshore needn’t be a traumatic process. The best approach is to start with a smaller project, and then to scale up. Today’s development differs from the commodity-based approach prevalent in India, and involves a more hands-on relationship with the client.

That’s easily accomplished with Nearshore developers in Mexico, who are close by and in the same time zone. Daily calls are no problem, and fly-ins for face-to-face meetings can be accomplished in short order.

The next big question is capabilities. For mid-size clients, Nearshore can easily provide enough talent, bringing people on board for a range of projects, from Digital Transformation to Cloud-based solutions, to Big Data & Analytics to development using more traditional technologies.

However, scaling up to hundreds of developers is still easier and quicker in a more mature outsourcing location like India.

Nearshore is also a good bet for organizations looking to extend their teams. This is less viable in India, where a lot of development is done in isolation from managers in the United States.

With Nearshore, customers can decide on the mix that works for them, and how much they want to do on-site. Often, a design team will be kept in house, and the development team Nearshore.

Depending on the customer, a Nearshore provider can also be much more flexible when it comes to the level of interaction and engagement with a customer. A Nearshore team can be there for continuous engagement.

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All told, it’s a compelling argument. Today’s Agile/Scrum customer wanting the cost advantages of outsourcing to India, with the the benefits of quality and collaboration found in the United States, should consider Nearshore. It’s the best of both worlds.

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1 comment

  1.    Reply

    Your days of raping the US economy are over thieves.