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The future of Nearshore Software Development

future of nearshore portugal

In the last years, organisations embraced new technologies and accelerated their digital transformation efforts at the fastest pace in the past decade. The need for social distancing, confinement and economic contraction has led to a new way of understanding work, how the market functions and technology.

For many decades, Outsourcing has been a reality for several companies worldwide. Initially, Outsourcing began more related to IT when in the late ‘80s, Kodak outsource its Servers to IBM. Since then, IT became more digital, and the scope grew from the infrastructure to the software development.

Outsourcing shows a very positive trend for the coming years, where predictions calculate an increase of the revenue generated by this kind of business. Some reports show that the global IT outsourcing market valued at USD 318.5 billion in 2020, is expected to reach USD 425.19 billion by 2026, registering a CAGR of 4.5%, during the forecast period (2021 – 2026).

“Do what you do best and outsource the rest”

This sentence exemplifies the discussion around what is CORE and what is CONTEXT for a company. Indeed, under a highly competitive environment, it is critical for companies to correctly manage their resources, both the human resources or/and the material ones.

The business rules have shifted this last decade. Pressure to have a shorter time-to-market made companies rethink their products and innovation processes, as a critical factor for their own survival. Effective digital transformation has become a competitive and survival imperative. Companies that handled this challenge best and evolved most rapidly were, and are, the ones that are thriving. The others were doomed to simply disappear.

IT & Digital Outsourcing was rapidly seen as the answer for this challenge and Nearshore seemed the right tuning to achieve the alignment between business and technology. For many companies, nearshore software development outsourcing has, therefore, become a strategic necessity.

Digital transformation processes were accelerated over the years, and businesses were forced, during the worldwide lockdown, to go full digital! Even if that was already true before COVID, many companies realised that it would be impossible to maintain in-house project teams with the wide range of competencies needed to keep up with the pace of technological change.

The post-pandemic context has therefore highlighted even more the advantages of Nearshore for the delocalised approach for Software Development.

The Importance of Agile in the New Software Development Nearshoring

Digital solutions are linked to the business more than ever before. Software development of the solutions that support digital transformation needs to adapt to the continuously changing business landscape. 

Many Nearshoring projects are also executed over several years. Features are being defined as things progress. So, Agile methodologies will be mandatory in outsourcing software development, to ensure that the solution will respond correctly to the business outcome/purposes.

Nearshoring, compared to other XShoring, is perhaps the model that best fits the Agile approach. Nearshore Agile Development is a very effective concept, as it creates the right discipline to set up the Agile teams, but also reduces the gaps between communication as well as cultural differences. Additionally, Nearshore outsourcing can provide time zone parity which will promote all the Agile ceremonials. 

“Nearshore as a skilled added-value Service provider” 

The importance of having a reliable partner is more and more a must-have to have a successful Nearshore software development experience… Yes! Today, everything is about Experience!
Partnerships are established in a long-term perspective and therefore the level of responsibility carried by the Nearshoring providers has never been higher. Boundaries between the nearshore partner and the client will become more and more diluted.

Also, Nearshoring is positioning itself in the high-value branch of Outsourcing. Among all XShoring models, Nearshore is seen as the model that brings potentially more added value to the final clients. 

In the coming years, some areas will see the demand increase, such as IoT, Cloud, IA/ML, Blockchain. These new domains will be present in the new Nearshoring software development as a catalyser to bring more added value to the solutions. Nearshoring software development will need to adapt its models and integrate these new disciplines into its ecosystem. 

This specialization in Nearshore will also result in creating a capacity to deliver added-value consulting in terms of advising how clients can approach their digital transformation and maximize the advantages of Nearshoring.

One transformation that Nearshore is going through is related to its delivery model. Nearshore has evolved from managing available resources in a capacity model to a higher commitment and engaging approach. 

As in other IT practices such as DevOps, Cloud, architecture based in microservices, Nearshore will probably evolve into a service-oriented setup. We can further imagine that this service-oriented model, combined with the specialisation, will allow Nearshore software development to be able to provide, in some specific areas, some standard components that eventually can be easily consumed by different clients, like a kind of API library.

This will be what we could call NaaS or Nearshore-as-a-Service!

In a nutshell, Nearshore software development services would rely on 3 main foundations or characteristics:

Long-term and Strategic Partnership
Higher specialisation and transfer of responsibility to the Nearshoring provider

Standardisation and Reusability

For sure, a bright future ahead… full of opportunities!

In Portugal, there is a lot of talent and there are many companies that need this kind of service. With experience in Nearshore since 2012, Devoteam is ready to support your company to scale your team and reach your goals, get to know our Nearshore offer.

Do you want to know more about the dos & don’ts when setting up nearshore software development teams?