Developing software abroad is a common strategy, but each region and its approach differ. For example:
Offshoring, particularly the successful Indian approach, has become a global phenomenon. The boom of Indian offshoring began in 2000 when American and European companies hired Indian experts to solve the Y2K problem, a pivotal moment that shaped the Indian software business model.
The year 2008 marked a significant shift in software development strategies. Faced with the US crisis and a surge in demand for developers, the concept of Nearshoring gained traction. This strategy, which involved hiring full-time developers primarily from Mexico and Latin America, was a strategic response to the crisis. It aimed to leverage the benefits of proximity and time-zone alignment, effectively bypassing Asia for the US and opening doors for Europe and China to establish operations in Latin America and expand their market into the US.
In 2024, a new model is emerging in response to the geopolitical situation: Northshoring, which means developing your software in North America, taking advantage of the NAFTA/USMCA agreement between Canada, theUnited States, and Mexico, in addition to all the benefits of Nearshoring.
Northshoring also included some benefits for Europe, considering the principles of following the sun in its conception. This consisted of establishing operations in Mexico to attend to the US users and promoting the benefit of working with developers who are fresh when your main team is ending the day. This way, you extend another 8 hours your working hours, compared with India, where you can add top 5 hours to the day.
Offshoring business model: It aims to sell as many developers as cheaply as possible. It embraces part-time hiring and the model of shared developers. (The more progressist companies have already adopted the long-term relationship priority)
Nearshoring business model: Aim to sell as many full-time developers in long-term relationships as cost-effectively as possible while working in the same time zone and prioritize both parts' quality of life and work balance.
Northshoring's business model consists of maximizing the quality of the developers, reducing costs by taking advantage of international incentives and increasing the offering to the developers, attracting better talent, and generating substantial savings for the hiring company. Northshoring follows the same principles as nearshoring but evolves them with the help of the country's international agreements.
The three models are helpful for companies in different stages.
