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You Don’t Need Offshoring Anymore


What Are The main Differences Between Offshore, Nearshore and Onshore?

First of all, when we talk about offshoring, what comes first to your mind? Many of you might think in outsourcing right?, well this isn’t that far from true, basically the term “shore” in the phrase it’s related to outsourcing software developers from abroad, taking into account that there exist markets with skilled and affordable talent. There are three concepts you need to know: offshore, nearshore and onshore. 

Offshoring:

This consists in outsourcing business processes and software development abroad, usually there is a time-zoned difference of 8 to 12 hours. This model has more risks due to language barriers, and cultural contrast. This type of outsourcing is usually selected because it is less pricey than onshore services.

Onshoring: 

This model consist in outsourcing the business processes and software development in a location located in the same country your company is working. In this case it is less risky, but doesn’t allow you to save a lot of money. 

Nearshoring: 

In this case you do the outsource the processes to nearby countries, (about 2 o 3 hours from the home country.) This is considered like the middle country between offshoring and onshoring.

Why Should Your Company Consider Nearshoring In Latin America?

Latin American countries are raising in their services of nearshoring, when we evaluate why doing it, what rises top are: the effectiveness, a skilled workforce, cultural affinity, and of course language capabilities.

Here are some reasons why to take into account nearshore instead of offshoring:

Cost: 

According to an investigation conducted by Wipro consultation shown that as whole Latin America offers a wage arbitrage opportunity of about 30 percent when compared to U.S and Western Europe.

In this case Colombia offers the most favorable cost benefits in the region followed by Argentina. Nonetheless we don’t know how long those savings could be sustainable taking into account that Asia has the highest real wage growth, for example salaries in Asia forecast to increase by 5,6 percent, up from the 5.4 percent last year.

This numbers inflation adjusted takes the real increase for 2,6 percent, the highest globally. Also a study conducted by A.T kearney shows that Latin American can deliver labour wage cost savings of 20 to 40 percent.

Language abilities: 

Latin American countries are best known for the high level english skills, with allow their countries to provide services in both languages, right now the top 5 countries with the highest english proficiency index in Latin America are: Argentina, Costa Rica, Uruguay, Chile and Cuba.

Another thing to take into account is that, those countries have a neutral accent, this could make it easier for native people to have an easier understanding of the spanish accent, this is a really positive thing to have in mind if you want to nearshore to a Latin American country.

Similar culture

Other thing to take in mind is that North America and Latin America have lots of similarities, mostly because all of the media that USA produced is consumed by the Latin American countries.

Additionally there is a significant pool of qualified people that search for post-graduate degree programs, this people usually return to their home country with new experiences but also some of the cultural nuances of the of the adopted country, this could help to make easier new negotiation procedures and help with the process of nearshoring.

Same time zone: 

Whit Latin American countries it’s common to have the same time zone, or just a little difference of 3 to 4 hours with USA, this is really useful considering that company’s can oversee and monitor the process, so there is a higher quality product. Another of the major benefits is the quicker response, and more control of the process without time delays.

Also this can reduce cost because of closer flights.

Local legislation: 

For last but not least, you should consider the legislation, in the case of nearshoring is having a greater understanding of the country’s changes in legislation and law. These are things you should take into account when considering nearshoring, there are many “hidden costs’, like travel expenses, supply chain, that could make offshoring an expensive option than nearshoring.

Whit nearshoring in a closer country could be the easier and convenient solution for the company.

How Can You Achieve Success With Nearshoring?

To answer this question i want to start with the following premise: “Businesses need to respond quickly to a constantly changing environment” in the time we are living right now the necessities of the consumers have changed completely, customers has become more entitled, and want his purchases immediately, and of course with the highest quality possible. 

Not longer is enough to give the product or service right, they ask for a discount, and free delivery when they make a purchase. Right now customers are asking for innovative ways to sell and deliver the product to them. That’s why nearshoring and agile development shape a strong basis for a digital transformation, working on the type of products the “entitled customer” wants. To do this the business needs to respond fast to changing requirements and invest in digital transformations. 

How?…You may ask, well business needs to start revising and improving their organizational processes, and taking advantage of the latest technologies, for example: Internet of Things this technology offers data to make decisions in marketing and make sales or Blockchain that works for securing transactions on the web. 

This kind of advances are easier when you work side by side with partners’s, mostly because you can watch how this experiments develop and the reaction of consumers, and decided on time if the works on progress needs a change immediately.This is where nearshoring, when combined with agile development works like a charm.

Costa Rica A Great Alternative To Do Nearshoring:

Over the past decade Latin American countries have emerged as nearshore outsourcing option, among the countries that are growing in technology related projects we can mention: Mexico, Panama and Costa Rica, this last one has seen a huge growth in the last years, becoming a excellent options for nearshore services, this is because the High Level English, and the Highly educated professionals, also is far to mention that the government is usually promoting this type of services.

Costa Rica is a country that can be considered “Americanized”, mostly because a lot of the media consumed comes from the USA. So you better be sure you won’t have problems with the cultural affinity. 

Another consideration is the workforce, the Global Innovation index shows that Costa Rica is in the top three, just behind Chile. The reason behind this is because Costa Rica is one of the most educated countries in Latin America, considering that education has a really easy access the country has achieved a 98% literacy rate. So you can count that your projects are going to be in capable hands, this is why Costa Rica is quickly becoming the high-tech/business hub. One of the many services you could find are: customer service, IT, Big Data, human resources and cloud computing and others. 

According to Auxis, outsourcing services can provide labor saving of 30 to 50 percent, this is for several reasons, for example the country’s proximity to time zone with USA. Picking up calls in the middle of the night it’s not fun for anyone, or hopping in 22 hours flights to check how the projects are progressing. Nearshoring has become the next way to take pressure off the company. 

The world of outsourcing and his siblings nearshoring and offshoring can be really complicated, mostly because entrepreneurs have to take in mind so many factors that can make this kind of decision into a difficult task, thats why its really helpful to have in mind all the advantages and disadvantages.  

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Toptal vs 4Geeks Teams

Recently we introduce you to 4Geeks Teams, our most important effort to connect LATAM-based talent (software engineers, designers, data scientists, product manager and more) to great companies.

The thing is that people are getting confused, or they are looking for some Toptal alternatives. I wrote this article specifically for them. Here you can find my brutally honest point of view on Toptal and 4Geeks Teams services, pricing, business models and more. Feel free to share this article with somebody else you think is needing more business options.

Toptal is one of the most popular marketplaces to hire remote freelance software developers. In the other hand, 4Geeks Teams is a complete platform to hire in-house top software developers in Latin America. Both of them are fixing a common huge issue: connecting talent to tech-based companies.

In this opportunity I will show you how Toptal and 4Geeks Teams are different, its values, experiences, pricing, business model and more, in order to provide you more information that you can use to make a good decision.

Time-zone and real-time collaboration

Toptal’s freelancers are located in any place in the world (in any time-zone); and it’s not necessarily an advantage for you, if real-time team collaboration is key for your business.

I personally know many companies that has been moved its operations from Asia or Europe to Latin America. Why? Because of time-zones. By the way, there are some ways I suggest to deal with this, please read my answer to “My Team is Working in Different Time-Zones, I Can’t Progress Anymore” on NearshoreCR.com.

You’re not alone. Trust me.

4Geeks Teams’ network consultants are located in LATAM, mainly in cities like San Jose, Costa Rica; Guadalajara, Mexico; Mexico City, Mexico; Bogota, Colombia. That means consultants will work in your same time-zone 🙂

Technologies

Both Toptal and 4Geeks Teams can connect you with digital consultants, product managers, data engineers and software developers experienced in technologies like PythonRuby on RailsJavascriptReact.jsReact NativeSalesforceJavaPHP and some others.

New technologies emerge almost every quarter. Digital products could become easily obsolete in short-time. So I suggest your product development team, including product managers, should have a wide vision and move forward fast with easy.

Pricing

I think the main reason to hire remote workers (software developers, product managers, designers, data scientists, etc) is limited budget. The second reason is limited talent.

Toptal charges $70-$120 USD per hour for a freelancer. 4Geeks Teams charges $2500 USD per full-time software developer.

If you have extra questions, feel free to connect with me by commenting below.

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The New Era is Digital Hiring

We know that people are changing and people have new priorities and ways to make the life more easy, recently bigger companies as Google, Amazon and Sykes are implementing new hiring process using AI, social media and blockchain. This emerging technologies allow to companies reduce processes a half and increase productivity and ROI.

Amazon is the pioneer of digital hiring implementing hiring software and chatbots, this technologies can filter efficiently inclusive in the first interview validating skills and experience with Artificial Intelligence.

What if you could look into the future and know what to expect? So let’s summarize a few exciting developments in the recruiting arena. You can source what you need to optimize your process now and position yourself to enjoy other features the moment you get access to them.

What is Digital Hiring and Which are benefits?

Digital recruitment is the process of leveraging technology to the source, attract, assess, select and hire candidates for vacant positions. This includes leveraging job boards, career websites, mobile recruiting, online assessments, and social recruiting. While most companies these days use at least one of the aforementioned tactics, they are still a long way from being classified as a digital strategy.

Using social media more effectively

Today, no one needs to be convinced that social media is an important recruitment channel. From LinkedIn to Facebook groups, even Twitter and Instagram, recruiters are active on social media, posting job ads. But which ones are the most effective? If you’re not tracking your ads, you have no way of knowing.

Using Artificial Intelligence and Chatbots

Just reducing time and hiring efforts, companies can use this resources to improve real problems in the organizations,Chatbots and AI are used in companies as PepsiCo and L’Oreal to improve process. Unlike a human recruiter, Chatbots can make thousands of calls a day, requires no sleep or breaks, and can do in one day what might take a human several weeks. Once completed, she sends recommendations on to the hiring manager for further review. If there’s a problem with the recommendations, hiring managers can alter the questions Chatbot asks to yield better results.

Applicant Personality

It is essential for the HR professionals to know about the personality of a potential candidate in order to see how well the candidate can fit into organization culture and policy. Social networking sites such as Facebook, linkedIn, twitter help in obtaining insight details about the applicant professional and personal lifestyle. It is a huge benefit for the companies when candidate use digital CV for a job as it consists of details about the individual precisely. It saves money and time of both the candidate and HR as candidates also get a chance to see company work culture through social networking sites.

Efficiency

Digital hiring is a time saver which improves hiring efficiency drastically. Internet never sleeps hence, instant response to job offer is quite possible. Not just speed it actually offers great services to one who relies on online hiring.

If you’ll put great efforts and go deep in your digital recruitment tool box then one can easily carry out information about previous placements and get much better result by comparing.

Social media hub allow you to track the status of the application and make task bit easier for the HR department. Progress can be monitored and screened from one place with ease.

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Why Go Remote?

Today I woke up at 6:30, took a shower, prepared breakfast, and was already working at 7 am from my living room; no traffic jams, no need for dressy outfits or heels, no pressure on catching the bus, no worries on leaving something at home, no need on programming my alarm at 4 am in order to be on time at the office, located almost 18 km from where I live -which by car doesn’t sound as much, but when one has to use public transport, oh boy, you can imagine-. I got to sleep 2 hours and a half more than usual and once the job was done, I was already at home; once again, without having endured any congestion, long traveling distances or hunger from forgetting my lunch thanks to the morning hastiness.

This is a perpetual reality for many workers that spend all their labor time at home -some from a congregated office, others from a prepared corner of the living room, some from their bed, all according to their personal preferences- because they have chosen a remote work dynamic with which to maintain contact with people from other countries and, sometimes, even from other continents, while still signifying a capable, resourceful and available workforce.

But, apart from all of this, what really is Remote Working and which effects could it have in the workers’ lives and in their respective corporations’ development?

What is remote?

We have discussed various topics related to remote working previously, just like when we talked about onshoring and offshoring. Then, we exposed the benefits of focusing on nearshoring, especially in Latin America when related to USA based companies but, why going remote at all?

Remote Year defines remote working as “a working style that allows professionals to work outside of a traditional office environment”, this as they develop professionally away from a centralized office compound. This means they normally do it at home, with all the commodities that can represent. However, wouldn’t that mean that they end up distracting, wasting time and being less productive? Not necessarily, it all depends on your specific remote work policy -topic we’ll focus on later- and the chores each individual develops; plus, there is, likewise, no insurance that your personnel won’t present this same behavior even if crowded in an office.

Yet, don’t believe me.

Statistics show a strong inclination from workers towards a remote attitude mainly because of a flexible schedule, regardless of the effort their job already implies. Also, even if they are free to work wherever they want, employees also prefer staying at home, so is really uncommon for staff members to use this location-freedom in order to take, let’s say, some really convenient vacations; which, as is shown likewise, if they do, they are prone to still fulfill with their responsibilities before enjoying their immediate environment.

However, these are mandatory securities at the moment of developing with your workforce but, what can remote working bring to a company specifically?

5 Benefits from having remote workforces

1. More productivity

Contrary to what is thought when work-from-home is firstly considered, remote workers tend to signify more productive spent-hours than those of their equals that develop at an office. Either because of distractions or unwillingness to complete the activities, even if both, a remote and normal worker, each invested 2 hours doing the same assignment, it results more likely for the distant employee to finish it during that time and/or with a better quality.

2. Wider working market to choose from

Let’s imagine a manager is in desperate need of an experienced programmer for a project he is developing, but he has to look for it in a limited ratio of 20 km around the working point for it not to mean much traveling time and raising the probabilities of starting at once. He will find no more than 100 in that stance, most likely only 20 will apply, 10 will actually present themselves to the interview, half of those will have the desired experience and knowledge, and finally only 2 people will actually be eligible options according to the company’s values. However, once you consider remote working a possibility, you open that range pretty much as far as internet connection allows, obtaining a much wider market from where to choose available workforce that can start working by getting to their closest computer or device and begin operating.

3. Lower price from office services

Let’s get back to examples once again. Visualize an office with 30 employees working in it, every single one of them means a cost in electricity, in water and, with so many people in a closed space, hopefully also in air conditioner.

Now, with only 1 person that worked from home, all it’s charges according to said assistances are already being completely saved, and therefore being won by the company. Imagine then if all 30 from them worked from home, not one dollar would have to be used for paying any of the resources mentioned above, that limited to only those 3, but could even be more.

4. Satisfied workforce that concludes in more retention

Remote working isn’t such a new modality, it has been applied diversely for more than 30 years ago, meaning that it has had since then to generate noise about its success. Because of this, many employees seek for it to become a constant hiring alternative, either as part time or fully remote.

This has a direct effect on their satisfaction and, therefore, on their retention. Many studies have shown a significant amount of workers to prefer the choice of working from home than a salary raise, as it means a more flexible schedule or, because of its location, one that is easier to adapt to. This being said, organizations ought to consider the dynamic if a worker they’re interested on keeping is pondering over other offer than includes it.

5. Less location-related expenses

We have talked about the in-office expenses, reducen when you have no staff getting together physically in one place. However, what about location related expenses? These divide in two:

Firstly, those that take a base in the workers’ life quality.

In order to analyze this situation, we have to understand that, at people’s geography not being limited by the closeness it has to their work place, they can settle down wherever their personal economy fits better; therefore, we don’t have employees buying a house in a neighborhood they can’t afford in order to drive less to their office, which takes us to another important detail: they are not wasting money in transportation, either if it is bus or gasoline for their car, train, etc.

By giving these aspects no percentage of their savings and incomings, peoples’ life become easier, their days become happier and their desire to remain in the remote modality increases, which ends up in, once again, more retention of laborers.

And, how can this also save bills for the company?
You’re not rehiring over and over again due to lost subordinates, which conserves time and money.

Secondly, those related to variations between countries’ social contexts.

When contracting people remotely from other countries, the salary you provide them has an absolute influence from their specific national-economic circumstances. Hence, if we have a company from, lets say, the United States, employing in Costa Rica, the expense this particular worker means to the organization would be considerably lower than if this same staff lived in the United States, for it adapts to the employees reality without affecting her or his wellbeing, as it goes in concordance to its country’s budgetary development.

Far from harming the worker’s life or its country’s situation, it may even end up being beneficial for both, as the individual is still contributing to its nation through personal and familiar purchases that part from her or his incomes, which are normally somewhat higher as they come from a more developed economy.

All Remote Companies vs Full time office jobs:

This trend is becoming more and more popular. Remote offices consist basically in a company that hires all their employees for remote working. This practice has become more and more common, that’s why managers and leaders need to be aware that they have to accommodate. As the world becomes more digital companies are considering taking a step back from the traditional way of hiring people. The idea of having a top talent workforce from all over the world can be pretty positive.

On the other hand, companies that are still full time offices have different perceptions. Many businesses have the perception that working remotely lost productivity and synergy between its employees. But this might not be true, only a misconception. Look for example the case of IBM. “In 2009 IBM reported that 40% of its workforce (386,000 employees in 173 countries) worked remotely. In 2017, the company asked thousands of these employees to return to the office. This might be a panic move from the leaders of IBM. After 20 quarters of straight losses employees must need to be in the same building for a “great idea to occur.”

At first the makes sense because bring everyone back to the office could improve collaboration. But this isn’t necessarily the case. To prove that the stock today is lower than it was in 2017. So maybe bringing everyone together might not be the best answer.

Taking these into considerations this are the best practice for remote team workers:

1.Set Boundaries With Remote Workers:

Working with remote teams can be a little tricky with the different time zones or the cultural shock. Many persons can be disturbed with the constant messaging or emails in the late hours of the night. For these reasons it is really important to discuss work schedules with each member of the team, and consultation hours.

2.Encourage and Embrace Diversity:

The more common obstacles in remote organization are the multicultural teams, language barriers and different accents. These can produce misunderstandings, and conflicts with the task assigned. One way unit managers can solve this kind of problem  working in teams in the same cultural range and embracing cultural diversity. Leaders should see this as an opportunity to learn more, and promote a mindset of celebrating differences.

3. Set The Expectations For The Team:

Every unit of work should have the expectations clear, whether they’re working remotely or virtually. This would help the employees feel the structure and same mindset to work towards a common goal. For example: work hours, the availability, and the communication system that is going to be used.

4. Improve Your Online Communication skill:

Remote teams present the setback of communication when they’re working on projects, the distance becomes a bigger problem, when you don’t have the necessary skills to communicate with your teams. As leader of a team you have to encourage the use of the right remote collaboration tools and assertive communication. Here are some pieces of advice:

  1. Having One-on-One Interactions 
  2. Encourage two-way feedback 
  3. Show appreciation 
  4. Conduct team building activities 
  5. Use time wisely

5. Invest in the right remote project management software:

This one is maybe one of the most important one, having the right software can help you to keep track of the project evolution, and productivity. Also it let’s all the people in the team share the information in real time. These kinds of improvements are really useful because it helps teams make the decision at the right time.

As you can see, just as remote working can bring many benefits not only to employees but also to their companies, it also has been tested enough to declare it a successful method, and to demonstrate that, even if communication can become difficult to handle at first, there is no problem that can’t be solved.

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Why Hiring Latin America-Based Talent it’s The Best for Cultural Fit

First of all we must be clear about the correct concept of culture. Therefore, culture refers to the set of material and spiritual resources of a social group, which is transmitted from generation in order to arrange individual and collective practices. It includes language, processes, ways of life, customs, traditions, habits, values, patterns and knowledge tools.

Its function is linked to guarantee survival and facilitate adequate adaptation of people to a determined environment.

In addition, the term of culture is used to talk about the values ​​and habits that dominate specific groups or for specialized fields of knowledge or activity, for example, as we will discuss in this blog the corporate culture.

Organizational culture is the set of norms, values, beliefs, ways of acting and thinking that members of a work team share.

With all these concepts clear, we can realise why organizational culture is so important. It guarantees national and international successful recruitment process, assures employees who leave it to take some type of learning and allows new employees to adapt in the easiest way, it could be based on respect, tolerance, effort, trust and motivation.

Taking all this information into consideración, we can talk about the real cultural fit and why it is very helpful when hiring developers in Latin America compared to countries like the United States or India.

What does cultural fit in a work environment, really means? In general terms, it means that beliefs and behaviors of an employee are aligned with the core values ​​and culture of the company that hires him. Taking into account that both, the worker and the company, handle the same philosophy and values, the adaptation process will be more agile, and the new worker will feel more motivated.

Once cleared all the doubts around cultural adjustment we must also ask ourselves, what are the values, beliefs, behaviors and experiences that make up the environment of the organization?

When you define a culture based on the aforementioned, you can gather people with different skill sets and backgrounds through a sense of shared purpose. This would lead us to a human-centered approach which would help us build high performance teams.

 When it comes about outsourcing software engineers, regions such as the Asian continent (India, to be precise) and Europe have always been the main outsourcing destinations, but everything has changed with the increase in software outsourcing in America Latina in recent years.

One of the characteristics that stand out from remote work is its increased by almost 90% in the last 12 years, in addition 50% of millennials already work remotely and almost 70% of the population worldwide has the option of getting work from home.

The growth of the outsourcing market in Latin America has been growing, studies conducted in 2018 claim that the main destinations for hiring remote workers between different continents (Europe, Asia and America), were Brazil, Argentina, Mexico and Colombia.

Reviewing this information, cities like India, China and Malaysia are below Latin America we see that developers of our continent have managed to make this important change for the region and it does not seem to stop in the near future, considering how fast the market is evolving.

According to data from Stack Overflow, the two regions with the most software engineers are Latin America and Asia, and the latter ranks first on the list. However, from that study we can see how more than one million software engineers are located in Latin America.

Studies conducted by Angile Engine directly showed how Latin American software developers have the HIGHEST classification when it comes about maintaining an excellent work environment, cultural compatibility and a great overall experience. So, yes, I could say that Latin American software developers are an excellent option to work. 

Finally, seeing the most attractive points of the developers in terms of working conditions, the language and the time zone keep them with excellent job satisfaction, something that is not as visible with the developers of India or the United States for example. In conclusion, hiring software engineers in Latin America has become one of the most attractive options for people who wish to develop their projects in the best way. 

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