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Aiming Far With Nearshore - A Mix of "Onshoring" and "Offshoring"

Posted on 7.09.2015

:: By Anurag Kumar, iTexico ::

Is your business looking too far when the solution might be next door? More high-tech companies across the globe are moving their operations back to, or near, the location of demand for their services, creating more flexibility for their practices, according to a new study by United Parcel Service (UPS). This business process, known as nearshoring, is the transfer of business or IT processes to companies in a nearby country, typically one which shares borders.

Nearshoring is somewhere in between “onshoring” and “offshoring.” Onshoring is providing traditional offshore IT services in a traditional high-cost geography, such as the U.S. or Europe. Offshoring, on the other hand, is the relocation by a company of a business process to a more distant location, such as China or India. Nearshoring offers certain advantages to businesses, including convenient and cost-effective technology solutions. 

With nearshoring, cost and productivity are equally considered, which is making many U.S. companies take notice of Mexico. According to Nearshore Americas, Mexico is the world’s fourth largest provider of IT services, IT outsourcing (ITO) and business process outsourcing (BPO) market, all of which has grown to over $12 billion in revenue, with annual growth of 10 percent. Mexico’s software and services sector now comprises more than 500,000 professionals, and its 121 colleges and universities are producing more than 90,000 graduates annually with IT-related degrees.

Having development teams in Mexico gives companies advantages, such as shorter travel time and more cultural alignment between businesses and their extended teams. Nearshoring in Mexico also overcomes several constraints of offshoring, such as the differences in local employment laws and practices. Furthermore, nearshore outsourcing in Mexico provides protection of intellectual property through the North American Free Trade Agreement (NAFTA), a benefit that other offshore companies in India, China and even Costa Rica can’t provide. 

With outsourcing in Mexico, the time zone is congruent with U.S.’s Central Time Zone, which creates a significantly larger opportunity for collaborative and real-time work with clients – no late night calls or communications limited to emails only. By means of only a few-hour flight from all major U.S. cities, companies’ local and Mexico teams can easily meet for more face-to-face interactions. 

By implementing a nearshore outsourcing business model, U.S.-based companies can benefit on the pros and eliminate most of the cons commonly associated with outsourced software development.

About the Author

Anurag Kumar is CEO and co-founder of iTexico, a leading nearshore mobile and cloud development company, headquartered in Austin, Texas. Anurag is an experienced global technology and management professional with a talent for finding innovative solutions to complex business problems and building and growing businesses.

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