Global IT Services Export to Nearshore Countries: Top 7 Trends and Predictions

Global IT Services Export to Nearshore Countries: Top 7 Trends and Predictions

By: TEAM International | September 20, 2022 | 16 min

We will hardly surprise you by saying that the software development industry continues to grow. Moreover, driven by recent geopolitical and economic events, we are seeing more interest and willingness to consider nearshore countries.With a large pool of software engineers, time zone convenience, and high English proficiency, LATAM is all the rage. It is massively referred to during discussions of nearshoring trends and is often named the best nearshore IT outsourcing destination.

Yet, the outcome of this dynamic period with high demand for value-added services, global IT talent shortage, and economic fluctuations will impact the realms of the industry. So, based on our experience in the industry, we’ve decided to list the top seven nearshoring trends that are likely to drive the market in 2023 and beyond.

1. Quality over price

This year, we’ve seen multiple factors affecting the decision-making process of business leaders, from geopolitical issues to inflationary pressures to emerging IT outsourcing risks. But even accounting for that, IT spending is not declining in 2022. On the contrary, CIOs are increasing investments in security, data analytics, customer experience, and cloud, demonstrating a 3 percent growth.

Cost-cutting is no longer a crucial factor for organizations when selecting nearshore outsourcing countries and partners. Instead, enterprises look for IT service providers in nearshore countries that can provide trust, deliver quality software, and add value. A better customer experience (CX) and enhanced security appeal to organizations more than savings. Organizations are continuously dedicating effort and resources to CX, driving up demand among LATAM companies and giving rise to new nearshore outsourcing trends.

2. Distributed work growth

With the pandemic’s onslaught, more companies are replacing traditional office-based positions with a flexible, remote workforce. The fears about remote teams are gone as 99 percent of HR and senior technology leaders start realizing the benefits. This transition in working norms has driven even greater favor of nearshore outsourcing countries in 2022 and will be one of the long-lasting nearshoring trends.

Reduced office overhead and access to experienced specialists globally make remote outsourcing a smart choice. Moreover, partnering with service providers allows you to rapidly fill the skill gap, achieve agility, and maintain a leading position. Extending teams to nearshore countries can give you a competitive edge by providing niche-specific expertise and accelerating time-to-market.

3. The end of on-premise infrastructure

Organizations worldwide will increase their spending on public cloud services in 2022, totaling $494.7 billion, up from $410.9 billion in 2021. Recent disruptions and economic challenges emphasized the growing need for high system accessibility, data recovery, and security.

The limitations of on-premise infrastructures have forced many companies to migrate data to cloud-based alternatives. So, no wonder most organizations strive to have cloud spending represent 80 percent of their IT hosting budget by 2024.

South American regions developed their potential as the best countries for nearshore IT and cloud solutions. We’ve also noticed that within this nearshoring trend, businesses implement a multi-cloud strategy to a large extent to enhance resiliency and continuity of operations.

4. More businesses go for AI and RPA

We have seen AI-enabled assistants and automated processes among the rising nearshoring outsourcing trends in app development and system optimization. By combining these technologies together and leveraging intelligent automation, organizations get a chance to free up resources from routine tasks, optimize operations, and better control information flows by integrating all business areas.

Artificial intelligence has remained one of the dominant forces in the digital world for years. Currently, companies increasingly outsource AI-based software development or implement elements of it into existing projects to keep up with the competition. Therefore, RPA and AI technology implementations remain the best-selling services among nearshore outsourcing countries and will evolve further as the leading nearshoring trend.

5. Cybersecurity remains paramount

Increased digitalization and reliance on cloud services also mean more potential for cyberattacks and a necessity to protect large data volumes. Therefore, business cybersecurity is still a top priority for C-suite. Being cyber-proof in a digital world, especially in times of growing cyber threats, is foremost. So, vendors from nearshore countries who can offer effective strategies and techniques to protect customers’ platforms and data will be in high demand.

In general, firms should start introducing various levels of protection immediately to reduce threats and ensure the confidentiality of corporate data. Also, we expect nearshore countries to massively switch to DevSecOps practices as more businesses introduce automated security testing mechanisms into their project development lifecycle.

6. LATAM will claim more of the market

Latin America benefited from several recent regulatory reforms that simplified business operations for foreign investors and customers. Local governments grow talent pools in programming and engineering fields and actively leverage new nearshoring trends. Additionally, they strongly invest in digital infrastructures to deliver high-quality technical services abroad. So, it is no surprise that LATAM experienced a 75 percent rowth in outsourcing during the pandemic.

There are obvious benefits for American companies to opt for nearshore countries. Meanwhile, globally, LATAM is ideal for companies looking to diversify their service hubs considering the great turbulence in the industry caused by the Russia-Ukraine war. So, here are the best countries for nearshore outsourcing and IT staff augmentation:

1. Brazil

Brazil is the largest economy in LATAM, with Fortune 500 companies establishing operations there. Numerous IT service vendors and fast-growing hubs for technology and innovation attract massive investments from all over the globe. Meanwhile, a large talent pool of tech experts speaking English and Spanish makes Brazil the best destination among nearshore countries and 15th in the Tholons Global Innovation Country Index 2021.

2. Mexico

Mexico is among the most popular nearshore countries, and it is often called as a valuable player in the business process outsourcing (BPO) sector. The number of IT-related graduates every year is higher than in Canada or Germany. Meanwhile, the government continues to invest in STEM education and nurture the tech industry, so Mexico is on track to become the best country to nearshore niche IT and BPO services. Additionally, the convenient time zone overlaps and cultural similarities make it a reliable partner for American businesses.

3. Argentina

Nearshoring trends strongly influenced Argentina’s well-established IT market. It’s a reputed exporter of software engineering and audiovisual services, with numerous regional research and development hubs. Argentina comes first in English proficiency in LATAM and is the first in Technology globally according to Coursera, demonstrating excellent skills in software engineering and operating systems. It is also recognized as a powerful player in AgTech, FinTech, and game development fields.

4. Colombia

Colombia has gone through numerous transformations to win the title of the best country to nearshore and now it can boast of thousands of tech companies in the region. It has the second-highest number of tech graduates in LATAM and is ranked 67 globally for its ease of doing business. Moreover, Medellin was chosen as a headquarters for the Fourth Industrial Revolution Center, a hub for regional and global cooperation to promote science and technology.

Expanding our global presence, Colombiawas selected as a home for TEAM’s first delivery center in Latin America. Today, we have offices in the most prominent LATAM nearshore countries and hire over 500 skilled software engineers there. We help clients and partners augment their IT staff and make the most ofsoftware development outsourcing services. Moreover, we leverage our best practices and vast domain expertise to drive and smooth their digital transformation journeys regardless of external conditions.

7. Long-term business relationships: from vendors to strategic partners

One of the transformational nearshoring trends we see is the shift of the vendors’ role from merely providing engineering skills to dealing with high-level challenges and aligning development with business strategies. These days, nearshore teams participate in system architecture design, risk prevention, and strategic planning and act as visionaries responsible for policy making. This new nearshoring trend of actual partnership and collaborative product development focuses and promotes close cooperation and software quality as the key values.

Find your strategic partner to benefit from current nearshoring trends

LATAM’s technology and IT sectors demonstrate impressive growth year after year. The geographical proximity and cultural affinity make it a perfect choice for US businesses. Meanwhile, a large pool of IT specialists, exceptional tech skills, and high English proficiency attract organizations globally.

So, keeping these nearshoring trends in mind and changing your approach to outsourcing will help you reach talent flexibility and better time-to-market. Engagement aiming at long-term partnership and business alignment is beneficial for both parties. For us, such collaboration means understanding your business and goals and approaching them as our own. This kind of attitude plus lasting, trusted relationships allow us to yield tangible value to our partners.

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