nearshore Archives | HatchWorks

24 Nearshore Software Development Statistics to Know in 2024

Andy Smith — Tue, 02 Jan 2024 20:04:43 +0000

Nearshore software development has become a sought-after solution for companies looking to optimize their outsourcing strategy.

In this blog, we delve into 24 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
Cost and Savings
Project Performance and Quality
Workforce and Skills

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.

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 various 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 strategies. Businesses want more efficient and cost-effective solutions. A competitive global marketplace will make using the right nearshore partner 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 development teams, a testament to their 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 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 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 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 nearshore team outsourcing partner, check out 5 Tips to Help You Select the Right Nearshore Development Partner.

8. Experts project the global outsourcing market to grow by $40.16 billion by 2025.

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 tech talent. The tech industry, in particular, is seeing a significant increase in contributions from Latin American professionals to North American ventures. This shift is reshaping the way the global workforce operates, enhancing international cooperation and driving economic growth.

Cost and Savings

9. 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 nearby 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.

10. 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.

11. 59% of companies choose nearshore software development as a cost-cutting tool.

Source: Deloitte

A majority of companies are turning to 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 their software development projects or 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.

12. Average nearshore software development rates are 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?

Did I mention nearshore developers work in your time zone?

PS. Curious about how much you could save with nearshore development for your specific project? Use our Nearshore Budget Calculator to build your own team and discover the cost benefits 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 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.

13. 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.

14. 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 development process. Learn more in our brief guide, How to Select the Right Outsourced Development Team.

15. 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

Key Takeaway: The challenge of talent acquisition and the doubled demand for software engineers highlight the critical need for skilled nearshore software developers. Latin American developers are highly rated for their skills and English proficiency, with an increasing focus on roles like Software Developer, Graphic Designer, and Product Manager.

16. 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.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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.

22. 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.

23. 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.

24. 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, similar time zones, 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 23 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).

Getting Started with HatchWorks Is Easy

Start your project in as little as two weeks and cut your software development costs in half.

The post 24 Nearshore Software Development Statistics to Know in 2024 appeared first on HatchWorks.

Top Latin American Countries for Nearshore Software Development [2024]

Andy Smith — Tue, 19 Dec 2023 16:42:41 +0000

Latin American countries are popular for software development outsourcing due to their proximity to the United States, their strong pool of talented engineering professionals, and their favorable time zones.

The software outsourcing services industry in LatAm has been growing significantly in recent years, and the region is home to many globally recognized tech companies and startups.

In addition to its technical capabilities, Latin America has a rich cultural heritage and a strong tradition of entrepreneurship. Many Latin American countries have business-friendly policies and favorable climates for investment.

The cost of living and doing business in many Latin American countries is also lower than in the United States and Europe, making it an attractive option to save on development costs without compromising on quality and time to value.

Why do companies outsource to Latin America?

Think of nearshoring as the perfect date and offshoring as a long-distance relationship.

Imagine finding the perfect date – the right partner who shares your interests and goals, has a strong understanding of your needs, and is always there to support you, in your time zone.

This is what nearshore is like for companies. It provides a level of proximity and cultural affinity that allows for efficient and effective collaboration. Plus, you’ll work with talented developers who have a strong understanding of the local job market.

On the other hand, offshore software development feels like a long-distance relationship – it may seem attractive due to lower labor costs, but it often comes with its own set of challenges such as language barriers and time differences. While it may work for some, maintaining a strong working relationship requires a lot of effort, patience, and some sleepless nights.

Want to dive deeper into the differences between these two outsourcing market options? Read our comprehensive comparison of Nearshore vs. Offshore software outsourcing.

In this blog, we’ll explore specific outsourcing destinations and why they could be the perfect match for the needs of North American companies.

Popular destinations for Nearshore: Latin America

Some popular Latin American countries for Nearshore include:

Costa Rica
Brazil
Colombia
Argentina
Uruguay
Peru
Mexico
Chile

Costa Rica

Costa Rica is a small but developed country in Central America with a growing software development industry, especially strong in custom software development. Its favorable time zone (same as Eastern US) and cultural compatibility with the US enable easy communication and collaboration between teams and client companies.

The cost of living and doing business is generally lower than in the United States, which is advantageous to save on development costs. The country’s strong infrastructure and stable political environment make it attractive for foreign investment. Despite recent challenges posed by rising energy and food costs and tight financing options, the country’s GDP (Gross Domestic Product) is projected to reach a growth rate of 3.2% in 2024.

The IT industry is supported by several universities and research institutions, as well as many business incubators and accelerators. The workforce is highly educated with a high percentage of degree holders. The country ranks fifth in Latin America on Coursera’s 2022 Global Skills Report. which measures proficiency in business, technology, and data science.

Its strong tradition of entrepreneurship and innovation culture has helped create many successful tech startups. The country has a business-friendly environment and is home to a number of multinational corporations that have established software development centers, including Intel, HP, and IBM. These companies helped Costa Rica become a hub for software development in LatAm, with cities like San José and Heredia setting the standard for supportive business environments.

Brazil

Brazil, the largest and most populous country in South America, is making its mark as a significant player in the global arena. It boasts a robust software industry with over 6,000+ software development companies and a software market recently valued at $11.3 billion. Brazilian software developers are known for their expertise in Java and .Net, making them sought after by foreign companies in need of specialized skills.

Thanks to favorable time zones that align with the US, companies can enjoy seamless communication and collaboration with Brazilian teams during regular business hours. This, along with its cultural compatibility, makes it a top destination, though Brazil stands apart from its neighbors in terms of language and cultural similarities. Portuguese is the official language, while Spanish is dominant throughout the rest of Latin America.

Brazil has a robust supply of skilled technology professionals, with over 200,000 STEM students graduating annually from its institutes. Sao Paulo, Rio de Janeiro, and Belo Horizonte are among the most prominent tech hubs in Brazil, known for their thriving startup ecosystems and supportive business environments. Some of the biggest names in the global tech industry, including IBM, HP, and Capgemini, have established a strong presence in Brazil.

Colombia

Colombia has a strong ecosystem of universities, research institutions, and a government that supports Latin America software outsourcing to businesses worldwide. The Colombian Ministry of Information and Communication Technologies (MinTiC), is actively working to curb an impending talent crisis in the outsourcing software development industry by implementing various initiatives to encourage the growth and development of the country’s tech workforce and attract more talent to the industry. These efforts could prevent a projected shortage of over 100,000 developers by 2025.

While nearly all Colombians speak Spanish, English is an official language in parts of the country like Andrés, Providencia, and Santa Catalina Islands.

Colombia is a rising major player in the global outsourcing market and the Latin American IT market, ranking fourth in size after countries like Brazil. Colombia has a number of successful tech startups and globally recognized tech companies, including MercadoLibre and Acelero, which have established software development centers and business operations in the country.

Bogotá, Medellín, and Cali are rapidly emerging as key tech hubs in Colombia and South America at large, with significant growth in the technology sector. These cities are attracting a growing number of tech startups, multinational companies, and skilled software engineers and developers, due to their favorable business climates, supportive government policies, and thriving tech communities.

Argentina

Argentina is known for its strong culture of innovation and entrepreneurship, and there is a vibrant startup ecosystem in the country. With a GDP of nearly $500 billion, Argentina is one of the largest economies in Latin America and South America.

The country has a highly educated workforce. Argentina ranked 34th in a list of global education rankings.

Argentina has a well-developed software development industry and a strong reputation for producing high-quality software professionals. Their long tradition of excellence in computer science and software engineering has paid off as revenues are expected to rise to over $2.7 billion by 2026.

The country is home to a number of successful tech startups and globally recognized tech companies, including MercadoLibre and Despegar. There are also a number of business incubators and accelerators that provide resources and support to entrepreneurs. The Aceleradoras BA Emprende, a Buenos Aires initiative that co-finances high-impact ventures to encourage growth, has invested over $3.5 million in local entrepreneurs.

Uruguay

This nation of 3.4 million has made a name for itself in the software outsourcing industry, with over 1,000 software development companies driving nearly $1 billion in software exports annually, mostly to the US. Its high per capita software export figures have cemented its position as one of the world’s premier software exporting nations.

Uruguay has a number of universities focused on software development and related technologies. The country has a highly educated workforce and a business-friendly environment. On a global ranking assessing a country’s technology infrastructure, technology adoption, and investment from both businesses and governments to determine its digital readiness, Uruguay ranked second among all Latin American countries.

It is also home to a number of successful tech startups, including MercadoLibre, dLocal, and Ona. According to the European Center for Digital Competitiveness report from 2021, Montevideo, the capital of Uruguay, has been named the world’s second-fastest-growing city in the Fintech sector.

Peru

Peru is a top-notch software outsourcing destination, ranking among the best in Latin America. Its economy is surging with a 3.5% year-over-year growth in the first half of 2022, a testament to its resilience and post-pandemic recovery.

Peru also has a couple of top-ranked universities and a thriving startup culture. Peruvian developers are highly skilled and educated, with over 25% holding STEM degrees, the highest in Latin America. When it comes to ReactJS and UX/UI design, Peru is home to some of the most talented developers and designers in the world.

The Peruvian government is investing in technology development through initiatives such as ProInnóvate and Startup Peru. The country is home to many multinational tech companies like IBM, Amazon, and Microsoft, which have established offices due to the top talent available.

Mexico

Mexico boasts a vast developer talent pool, with over 225,000 developers making their mark in the tech industry. This impressive number is a testament to the country’s commitment to fostering tech talent. In 2023, projections indicate that the revenue for the software industry in Mexico will reach a staggering $3.9 billion, showcasing its rapid growth in the tech sector.

The country has firmly established itself as a leading tech innovation hub. With over 20 tech parks, including renowned ones like the Creative Digital City and Guadalajara Software Center, Mexico is at the forefront of technological innovation. By the end of 2022, the startup scene in Mexico witnessed the inception of 453 new startups, and this number is expected to rise further in 2023.

Recent initiatives have seen the Mexican government opening 120 tuition-free tech universities. This move further bolsters its tech talent pool, ensuring a steady influx of skilled professionals. Every year, the country celebrates the graduation of over 130,000 engineers, further solidifying its position as a tech powerhouse.

Chile

Chile, especially its capital Santiago, is emerging as a significant technology hub in Latin America. Often referred to as “Chilecon Valley”, the country is a hotspot for elite developer talent. With a robust developer community, Chile is home to over 61,000 software developers and more than 4,000 software development companies.

In 2022, the software industry in Chile made headlines by generating a revenue of $1.4 billion. This achievement reflects the country’s dedication to technological advancement and innovation. Chile’s high ranking on the Global Innovation Index, securing the 53rd position out of 132 economies in 2021, is a testament to its innovative spirit.

The country is also renowned for its quality tech education. Several Chilean universities rank among the top 500 globally, emphasizing its focus on science and engineering. With nearly 25% of Chilean graduates earning degrees in these fields, the future of tech in Chile looks promising. Additionally, Chile’s proficiency in the English language ensures smooth communication, making it a preferred destination for nearshore outsourcing and software development.

Closing Thoughts

As the global demand for continues to grow, nearshore has emerged as a popular option for infrastructure development for US businesses. By choosing the right nearshore software development partner with a strong pool of talented developers in these countries, companies can take advantage of the many benefits of nearshore development while minimizing the challenges and mitigating risks. To learn more, read our essential guide.

HatchWorks is the Right Nearshore Partner

Partner with HatchWorks for top-tier outsourcing services, where you’re not just getting a provider but a true partner. Experience the best of both worlds with a US-based solutions practice with the affordability and scale of Nearshore.

Our team not only understands your needs and speaks your language but also operates in a similar time zone for seamless collaboration.

Our rigorous 5-step screening process ensures only the finest talent for your project, contributing to our impressive 98.5% retention rate.

By choosing to outsource to Latin America, you benefit from lower labor costs compared to local rates, without compromising on quality or efficiency.

As one of the leading outsourcing destinations, Latin America offers a wealth of opportunities for your business. Whether it’s software development, customer service, or any other outsourcing need, HatchWorks stands ready.

Ready to harness the transformative power of Nearshore outsourcing? Contact HatchWorks today and elevate your project from concept to reality.

Hatchworks: Your US-Based Nearshore Software Development Partner

Start your project in as little as two weeks and cut your software development costs in half.

The post Top Latin American Countries for Nearshore Software Development [2024] appeared first on HatchWorks.