Nearshore software development has become a sought-after solution for companies looking to optimize their outsourcing strategy. In this blog, we delve into 23 key statistics about the nearshore software 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.
Market Growth and Trends
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 in various industries, companies are increasingly outsourcing as a cost-effective and efficient solution for their software development 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 strategies. Businesses want more efficient and cost-effective solutions. A competitive global marketplace will make nearshore 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, a testament to its potential to boost the competitiveness and success of small businesses. With the right partner, nearshore outsourcing can help small businesses achieve their goals and compete with larger companies.
4. US-based companies seek nearshore talent in Latin America because of a close workday overlap, strong cultural fit, and high English language proficiency. Source: Accelerance
Our guide to Nearshore covers even more benefits of nearshore and how they compare to onshore and offshore. 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 Latin America’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 top-notch talent
- Benefit from cost-effective solutions
- Support growth with flexible scaling options
- Streamline processes and speed up time-to-market
6. Some of the top nearshore software development 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 Latin America.
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 developers remain in high demand, company culture and attrition rates will be increasingly important for nearshore software development providers. For more information on how to select the right outsourcing partner, check out 5 Tips to Help You Select the Right Nearshore Development Partner.
Cost and Savings
8. 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 a more appealing option. By outsourcing software development to countries with lower labor costs, you can lower your expenses without sacrificing efficiency or quality (location doesn’t matter, talent does!). Nearshoring is a smart choice for companies that want to weather the economic storm and emerge stronger on the other side.
9. 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 Ukraine. Nearshoring is a hot commodity and a more competitive marketplace than a few years ago.
10. 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. Nearshoring helps free up internal resources and allows the company to concentrate on its core competencies. Additionally, nearshoring can solve capacity issues, allowing companies to quickly ramp up development efforts without having to make significant investments in infrastructure or staffing. This can be especially useful for companies facing rapid growth or changing market conditions.
11. The average hourly rate for nearshore software development is 46% lower than onshore rates. Source: HatchWorks
You read that right – nearshore offers a staggering 46% lower hourly rate compared to onshore! This kind of cost savings is simply too good to ignore. And while offshore development 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 nearshore?
PS. Did I mention nearshore developers work in your time zone?
Project Performance and Quality
12. 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 nearshoring can provide a boost in both areas. When businesses incorporate nearshore, they gain access to a highly skilled workforce that can help them achieve their goals faster and more efficiently. This highlights the trend of nearshoring as a strategy to achieve growth and compete.
13. Nearly 59% of businesses are pleased with the financial benefits provided by outsourcing. Source: Zippia
Before outsourcing, it’s important to weigh the pros and cons. 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. Nearshoring can minimize these challenges and improve the process by taking advantage of cultural similarities and a compatible time zone.
This leads to a more seamless integration of outsourcing into their operations and a more efficient and effective overall process. Learn more in our brief guide, How to Select the Right Outsourced Development Team.
14. Over 75% of businesses report a positive attitude towards their outsourcing partners. Source: Zippia
Having the right nearshore development partner can lead to improved project performance, a higher level of quality 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
15. 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. 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.
16. 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.
17. 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.
18. 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 teams and more efficient delivery of software solutions.
19. 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.
20. Demand 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.
21. 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.
22. Full stack engineers saw the highest increase in interview requests. Source: Hired
This 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.
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.
These 23 statistics provide a snapshot of Nearshore and the benefits companies can expect. 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.
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 is the Right Nearshore Partner
Don’t miss out on the opportunity to tap into the talented pool of Latin American developers at HatchWorks, delivering top-notch solutions across the region.