Nearshore software development has become a sought-after solution for companies looking to enhance their in house team and optimize their outsourcing strategy.
In this blog, we delve into 25 key statistics about the nearshore software outsourcing market, the cost savings and performance benefits, the quality of the workforce, and the management processes in place.
Whether you’re already using nearshore or considering it as an option, these statistics will give you a deeper understanding of the nearshore landscape and how it can benefit your business.
These statistics are organized into four categories:
Market Growth and Trends
🔑 Key Takeaway: The demand for software development services is increasing, with a notable shift towards nearshore software development in North America and Latin America emerging as a key destination. Growth forecasts for the global outsourcing market emphasize the rising importance of regional stability and cultural alignment in nearshore software development teams.
📈 1. Software development accounts for 64% of outsourced services worldwide.
Source: Statista
There continues to be significant demand for software development services in the global market. With the growing reliance on technology and skilled professionals in various industries, companies are increasingly outsourcing as a cost-effective and efficient solution for their high quality software development services needs. This trend shows no signs of slowing down.
📈 2. 80% of companies in North America are actively considering nearshore.
Source: Bloomberg
There’s been a shift in outsourcing software development. Businesses want more efficient and cost-effective solutions. A competitive global marketplace will make using the right nearshore company an increasingly important consideration for companies in North America. Here are some simple reasons to consider Nearshore for Software Development.
📈 3. 21% of small businesses outsourcing intend to hire a nearshore company, up from 15% the previous year.
Source: Clutch
Businesses are embracing nearshore developers, a testament to their potential to boost competitiveness and project success. With a reliable technology partner, nearshore software development services can help businesses achieve their goals, stay competetive, embrace emerging technologies, and create innovative solutions.
📈 4. US-based companies seek nearshore talent because of a close workday overlap, strong cultural fit, and high English language proficiency.
Source: Accelerance
US-based companies increasingly turn to a nearshore outsourcing model to access skilled professionals in neighboring countries with time zone compatibility, enabling seamless collaboration. This approach offers a proven track record of delivering tailored software solutions through agile methodologies, ensuring projects align with business goals. Nearshore teams provide a strong cultural fit and high English language proficiency, making them an ideal choice for businesses seeking efficiency and innovation.
Our guide to the Nearshore software development model covers even more benefits of nearshoring software development and how they compare to onshore and offshore software development outsourcing. Give it a read to learn which specific projects are best suited for nearshore development.
📈 5. Nearshore outsourcing will add $78B to the export sector in Latin America after 2023.
Source: IADB
It’s time to think outside the (geographical) box for your next project and tap into LatAm’s thriving nearshore outsourcing scene while you still can! The region is poised to become a hot spot for software development outsourcing.
Businesses are eager to:
- Access a top-notch talent software team
- Benefit from cost-effective solutions
- Support growth with flexible scaling options
- Streamline business processes and speed up time-to-market
📈 6. Some of the top ten nearshore software development companies’ destinations are Peru, Colombia, Brazil, and Costa Rica.
Source: The Wall Street Journal
For a comprehensive overview of the key factors you should consider when choosing a nearshore outsourcing destination, including the availability of talent, language proficiency, time zones, cultural compatibility, and cost, check out our guide to the the top nearshore destinations in LatAm.
📈 7. Experts project the global outsourcing market to grow by $40.16 billion by 2025.
Source: ReportLinker
Regional stability and security are top concerns in business partnerships. As skilled developers remain in high demand, company culture and attrition rates will be increasingly important for nearshore software development outsourcing. For more information on how to select the right nearshore team outsourcing partner, check out 5 Tips to Help You Select the Right Nearshore Development Partner.
📈 8. North-South Partnerships Lead the Way in Remote Work Growth
Source: Lightcast
In 2022, there was a notable 70% jump in the number of South American remote workers hired by North American companies. This uptick is part of a broader movement towards global remote employment, spurred by Latin America’s rich pool of software professionals. The tech industry, in particular, is seeing a significant increase in contributions from Latin American development teams to North American ventures. This shift is reshaping the way the global workforce operates, enhancing international cooperation and driving economic growth.
📈 9. Global IT Outsourcing Revenue to Surge 50% by 2029.
Source: Statista
The IT outsourcing industry is projected to grow by 50.22% from 2024 to 2029, reaching a record $812.71 billion in global revenue. This steady growth reflects increasing demand for scalable, cost-effective software solutions. Nearshore software development plays a pivotal role in this expansion, offering businesses a competitive edge through proximity, cultural alignment, and access to specialized talent while driving innovation in an increasingly digital world.
Cost and Savings
🔑 Key Takeaway: The demand for software development is increasing, with a notable shift towards nearshore software development in North America. Growth forecasts for the global outsourcing market emphasize the rising importance of regional stability and cultural compatibility in nearshore software development.
💰 10. 87% of IT businesses considered nearshore outsourcing to cut costs.
Source: Deloitte
During a recession, there is increased pressure to reduce costs and maintain competitiveness. This makes nearshoring software development a more appealing option. By outsourcing software development to neighboring countries with lower labor costs, you can find significant cost savings without sacrificing efficiency or quality (location doesn’t matter, talent does!). Nearshoring software development is a smart choice for companies that want to weather the economic storm and emerge stronger on the other side.
💰 11. Rates surged by 24% in Latin America, due to escalating labor costs and an influx of clients exiting partnerships in Ukraine.
Source: Accelerance
It’s clear that businesses are seeking alternative solutions for their software development needs as a result of the conflict in Central and Eastern Europe. Nearshore software development is a hot commodity and a more competitive marketplace than a few years ago.
💰 12. 59% of companies choose nearshore software development as a cost-cutting tool.
Source: Deloitte
A majority of companies are turning to nearshore software development as a way to reduce costs, including travel and communication expenses. Nearshore development services help free up internal resources (like in house development teams) and allows the company to concentrate on its core competencies.
Additionally, nearshore development teams can solve capacity issues, allowing companies to quickly ramp up their software project without having to make significant investments in infrastructure or staffing. This can be especially useful for companies facing rapid growth or changing market conditions.
💰 13. Average nearshore software development rates are 46% lower than onshore rates.
Source: HatchWorks
You read that right – nearshore developers offer a staggering 46% lower hourly rate compared to onshore!
This kind of cost savings is simply too good to ignore. And while offshore software outsourcing may be more competitive on the lower end of the spectrum, there is almost no difference on the high end.
So, why settle for anything less when you can get the best of both worlds with a nearshore software development company?
Did I mention nearshore developers work in your time zone?
PS. Curious about how much you could save with a nearshore software development team for your specific project? Use our Nearshore Budget Calculator to build your own nearshore agile teams and discover the cost efficiency for yourself. Get a tailored estimate that aligns with your project’s unique requirements and see the savings firsthand. Try it now!
Project Performance and Quality
🔑 Key Takeaway: Nearshore software outsourcing is chosen for efficiency and expert access, with businesses reporting satisfaction with the financial and quality outcomes. Positive relationships with nearshore developers contribute to enhanced project performance and quality assurance.
🌟 14. 24% of small businesses outsource to increase efficiency and 18% outsource to work with experts.
Source: Clutch
Project performance and quality are critical factors for success, and nearshore development services can provide a boost in both areas. When businesses incorporate a nearshore software team, they gain access to a highly skilled workforce that can help them achieve their goals faster and more efficiently. This highlights the trend of partnering with nearshore development companies as a strategy to achieve growth and compete.
🌟 15. Nearly 59% of businesses are pleased with the financial benefits provided by outsourcing.
Source: Zippia
Before outsourcing custom software development, it’s important to weigh the pros and cons. Software outsourcing saves costs and improves efficiency, but also comes with project management and coordination challenges.
To avoid these risks, companies must have clear communication and collaboration plans. A nearshore development team can minimize these challenges and improve the process by taking advantage of cultural similarities and time zone compatibility.
This leads to a more seamless integration of software outsourcing into their operations and a more efficient and effective overall development process. Learn more in our brief guide, How to Select the Right Outsourced Development Team.
🌟 16. Over 75% of businesses report a positive attitude towards their outsourcing partners.
Source: Zippia
Partnering with the right nearshore development company can lead to improved project success, a higher level of quality assurance in the work produced, and a more stable and long-term working relationship.
By following the tips outlined in our blog post, 5 Tips to Help You Select the Right Nearshore Development Partner, companies can increase their chances of finding the right nearshore development partner and establishing a positive and productive outsourcing relationship.
Workforce and Skills
🔑 Key Takeaway: There’s a global tech talent gap. The challenge of talent acquisition and the doubled demand for software engineers highlight the critical need for skilled nearshore software developers. Nearshore development teams are highly rated for their skills and English proficiency, with an increasing focus on roles like Software Developers, Graphic Designers, Product Managers, and Project Managers.
👩🏻💻 17. 50% of executives identify talent acquisition as a top internal challenge in meeting their organization’s strategic priorities.
Source: Deloitte
Having a strong and dedicated workforce is essential for the success of any organization. A shortage of qualified employees can lead to delays in projects, reduced productivity, and lower levels of innovation with cutting edge technologies. Furthermore, a lack of talented employees can make it more difficult for companies to adapt to changing market conditions and meet customer demands. Companies need to have effective strategies in place to attract and retain top talent.
👩🏻💻 18. The demand for software engineers has doubled since 2020.
Source: Hired
The exponential increase in demand for software engineers shows that technology is an essential driver of business growth and innovation. Investing in software development and modernization is required to stay ahead of the competition and meet demand. Our blog offers more insights into the ongoing Software Developer Shortage.
👩🏻💻 19. Software developers from Latin America are among the top-rated globally.
Source: HackerRank
This is no surprise! Software developers from Latin America possess strong technical expertise and dedication to delivering quality results. They’re educated at well-respected universities, producing a large pool of truly talented and skilled individuals. A strong work ethic and commitment to meeting the needs of clients have made LatAm one of the top software development regions globally.
👩🏻💻 20. Latin American countries consistently rank moderate to high on the English Proficiency Index.
Source: Statista
High levels of English proficiency ensure effective communication, cultural alignment, and aligned workplace expectations. This also helps facilitate better collaboration between development teams and more efficient delivery of software solutions.
👩🏻💻 21. English speakers in Latin American countries have the fastest rate of improvement in the world.
Source: Education First
Central and South America are on a roll in the tech world! With an increase in English proficiency, the region is keeping pace with the latest advancements in software development. Government investments in STEM education and technology startups are paying off.
👩🏻💻 22. Demand for tech talent for product and design roles is shifting from the US to countries like Argentina.
Source: Deel
Organizations are looking for more than just engineering by moving more product design and UX / UI capabilities abroad too. Working in a distributed environment is the new normal. Aligning by time zone is now the most important factor in having a productive Agile team that can share the day’s work.
👩🏻💻 23. The top three most popular roles in Latin America are Software Developer, Graphic Designer, and Product Manager.
Source: Deel
The Latin American job market is booming for tech and creative talent. The increasing importance of technology and visual communication is driving the demand for software development and graphic design expertise. Meanwhile, the growing focus on product strategy and customer experience is reflected in the popularity of Product Manager roles.
👩🏻💻 24. Full stack engineers saw the highest increase in interview requests.
Source: Hired
This talent shortage is no surprise! Companies value problem solvers. Full stack engineers can tackle a wide range of software development challenges. Their versatility and understanding of front-end and back-end development are an excellent addition to any well-rounded software development team.
👩🏻💻 25. The most used programming languages among developers worldwide are JavaScript, HTML/CSS, SQL, and Python.
Source: Statista
Knowing these top programming languages gives developers a competitive edge. These languages allow you to work on a wide range of projects and stay relevant in the constantly changing tech industry.
Nearshore Software Development Destinations: Exploring Latin America
When considering nearshore software development destinations, Latin America stands out as a region of burgeoning talent and opportunity.
The blend of cultural alignment, minimal time zone differences, and a highly skilled pool of software engineers makes it an attractive option for businesses looking to outsource their development needs.
To dive deeper into why Latin America is becoming a hotspot for nearshore development, and to explore the specific benefits and countries leading this trend, check out our detailed analysis in our blog post: Top Latin American Countries for Nearshore Software Development [2024].
Final Thoughts
🔑 Key Takeaway: With a growing market, cost savings, high-quality projects, and top talent in your time zone, nearshore is a compelling option for companies outsourcing their software development.
These 25 statistics provide a snapshot of Nearshore and the benefits companies can expect. Whether you’re a startup looking to build your first product or an established company looking to reduce costs and improve time-to-market, Nearshore software development can help you reach your goals.
Hatchworks: Your US-Based Nearshore Software Development Partner
HatchWorks is a US-based Nearshore software development partner that combines Generative-Driven Development with the affordability and scale of Nearshore outsourcing, all in your time zone.
Our teams are fluent in English and have a 98.5% retention rate—meaning your project won’t be interrupted or delayed.
After a 5-step screening process, we fit you with the right talent for the job and build your digital products one of three ways: through Staff Augmentation, Dedicated Agile Teams, or Outcome-Based Projects (a full service software development solution).
Frequently Asked Questions
How can partnering with a nearshore software development company enhance project management and agility?
Answer: Partnering with a nearshore software development company can significantly improve project management and agility. Nearshore development teams operate within minimal time zone differences, facilitating real-time communication and collaboration. This proximity allows for the seamless integration of agile methodologies, enabling your in-house team and nearshore developers to work synchronously. The cultural similarities also reduce language barriers, ensuring that project managers can efficiently oversee the development process, leading to high-quality software development and successful software projects.2. What are the cost efficiency benefits of nearshore software development compared to offshore outsourcing?
Answer: Nearshore software development offers significant cost savings while maintaining high-quality results. Unlike offshore software development outsourcing, which may involve challenges like language barriers and substantial time zone differences, nearshore outsourcing provides a balance of affordability and effective collaboration. By working with neighboring countries, companies can reduce development costs associated with miscommunication and delays, achieving significant cost savings without compromising on the quality of the software solutions.3. How do nearshore development teams contribute to digital transformation and innovation?
Answer: Nearshore development teams consist of skilled professionals and software engineers proficient in cutting-edge technologies and emerging programming languages. By outsourcing software development to a nearshore partner, businesses gain access to a highly skilled workforce that drives digital transformation and delivers innovative solutions. These teams can handle a variety of projects, including mobile app development and web development, helping companies stay competitive and responsive to market changes.4. In what ways does cultural compatibility affect the success of nearshore software development projects?
Answer: Cultural compatibility plays a crucial role in the success of nearshore software development projects. When the development team shares similar cultural values and business practices, it enhances communication and reduces the likelihood of misunderstandings. This alignment facilitates smoother collaboration, efficient project management, and better integration with your in-house team. The result is a more effective development process, improved quality assurance, and a higher likelihood of project success.5. What strategies can companies employ to select the right nearshore software development partner?
Answer: To choose the right nearshore software development partner, companies should:- Look for nearshore development companies with a proven track record of delivering high-quality software solutions.
- Evaluate their expertise in agile methodologies and their ability to integrate with your existing development team.
- Assess the skills of their software professionals, including proficiency in relevant programming languages and technologies.
- Ensure they offer significant cost savings without compromising on quality.
- Verify their communication skills to minimize language barriers and confirm time zone compatibility for seamless collaboration.
By carefully selecting a reliable technology partner, businesses can optimize their outsourcing model, enhance business processes, and achieve project success with their nearshore software development initiatives.
