Technology

Why Nearshoring is Vital to the U.S. Tech Sector Right Now

nearshoring

In June 2020, President Trump temporarily suspended work for H-1B visa holders in the United States. Demand for top-tier tech talent was already fierce in the U.S. before the decision. Still, the ban has placed significant additional pressure on companies that can no longer rely on sourcing international workers. Here is why nearshoring is vital to the U.S. tech sector right now.

The tech sector hires 85,000 foreign specialists every year and finds alternative ways such as nearshoring to sustain its workforce.

Before the Ban

An option prior to the ban, nearshoring, has been emerging as an attractive solution, particularly as remote work becomes even more commonplace in the tech sphere. Nearshoring is when companies hire teams overseas but in locations close by and share a time zone.

Not only is nearshoring ideal to harness foreign tech talent, but it can also save businesses up to 80 percent on costs. Considering many companies are struggling financially because of the COVID-19 pandemic, such savings are a much-needed lifeline.

Big data experts, programming consultants, and digital strategists from software engineers, the scope of potential nearshored roles, are vast. Here’s why nearshoring is vital to the U.S. tech sector right now:

The Value of Nearshoring

As many businesses have adjusted to remote practices due to the pandemic, most people are already familiar with operating effectively at a distance so that they can make a seamless switch to nearshoring.

Unlike offshoring, nearshoring focuses on locations within proximity to the U.S. As a result, there is greater time zone compatibility between businesses and nearshored workers, meaning teams can collaborate and communicate in real-time via video, in documents, or via digital channels.

Likewise, nearshore services allow for heightened business agility because companies can request specific deliverables that may not be possible through their in-house teams. Companies can, therefore, develop and test products and services at a faster pace and iterate accordingly.

These agile processes create greater flexibility among teams, as well as shape a ready-to-scale workforce. By accelerating the time to market and having an on-the-ground presence in international markets, nearshoring helps identify places to expand into and poises companies for quicker growth.

Diversity also comes into play with nearshoring. With studies showing that diversity influences stronger, more creative teams, companies that opt to work with people from different backgrounds can benefit from a new perspective on solving problems.

Considering that many businesses prioritize their diversity and inclusion efforts in the new normal, nearshoring is a powerful way to boost diversity without asking people to leave their homes, families, and cultures.

Another noticeable draw is that nearshoring reduces expenses for U.S. startups. For early-stage ventures in Silicon Valley or other tech hubs, nearshoring is far more cost-effective, as salaries and living costs are lower than in the U.S. Not to mention, companies don’t have to cover visa sponsorship or relocation packages associated with the H-1B visa.

Nearshoring Hotspots for the U.S.

Latin America is a clear choice for U.S.-based companies facing obstacles related to the H-1B visa suspension.

The region has a maximum time difference of a few hours, and travel between many Latin American cities and the U.S. requires only a short flight.

English-language skills are also impressive there – Peru, Chile, Mexico, Ecuador, and Brazil have all surpassed China in English proficiency.

Meanwhile, countries like Panama and Colombia have ongoing national plans to reach bilingualism.

The top five Latin American spots for nearshoring include Argentina, Belize, Nicaragua, Puerto Rico, and Colombia. Argentina has an impressive track record of high education rates, along with the best English proficiency in Latin America, and the promise of 5G capabilities coming soon.

Belize is home to a workforce with experience in the tourism industry, so it is accustomed to North American culture. Nicaragua is experiencing elevated investment from the U.S. and has committed to having more technology in education, meaning younger generations are tech-savvy and show an interest in the field.

Puerto Rico already has tech companies like Microsoft and GE on the island and has plans for a new artificial intelligence technology center. Meanwhile, Colombia has a ministry dedicated to furthering science, tech, and innovation in the country, and is home to the unicorn on-demand delivery company, Rappi.

Colombia boasts an impressive number of highly-skilled developers, too; between 2001 and 2013, the country’s pool of IT professionals hit 340,000.

How to Choose a Nearshoring Partner

As opposed to freelance developers and tech workers, nearshoring offers companies a strategic partnership to source teams. Nearshoring partners serve as mediators to help companies find and vet people for projects ranging from small technical fixes, product testing, or full product launch.

They also bring to the table their previous business experience and technical acumen, full remote operation capabilities, formal structure, high compliance levels, and support for the team to thrive and deliver.

When looking for nearshoring partners, companies should first identify what skills they need for the given projects. They should then approach nearshoring partners that have a deep understanding of these skills and target markets.

It’s also worthwhile if the partners have experience working with developers and engineers with complementary skill sets.

Additionally, it’s useful to see testimonials from companies in similar industries that have worked with the nearshoring partner and recommend their services. In short, look for experience and social proof.

At the same time, companies are responsible for doing their own homework and researching the locations they want to nearshore in. Being informed about the political situation, legislation for nearshoring, tech infrastructure, data capabilities, education, and quality of life in the desired areas, is useful when deciding where to invest in teams.

Opportunities and Challenges

International workers are the backbone of tech in the United States, and abruptly preventing them from accessing the country is not a sustainable option for companies. Amid the visa ban and pandemic, developers’ demand remains high – no doubt, due to companies moving online to stay afloat during quarantine measures.

While Trump’s order certainly blocks access to international talent in the U.S., it actually opens the door for foreign developers with niche skills that aren’t always available locally.

As companies realize the perks associated with nearshoring, it’s likely to become a long-term model for leveraging overseas workers and markets. Nonetheless, companies need to move quickly to secure their nearshoring partner of choice and maintain business continuity for clients and stakeholders.

Image Credit: iStock

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