CIOs and technology decision-makers operating in today’s economy need to ensure that investments in new applications result in value for the business.
Using cost-savings and efficiency as goals, companies have traditionally outsourced application development projects to lower-cost locations such as China, Eastern Europe and, most frequently, India.
No one can fault them for this.
Offshore application development providers consistently trumpet their ability to deliver custom applications at a significant cost savings to the client.
But the reality is that communication issues and geographical distance in these projects may limit the gains of labor arbitrage at the expense of productivity and delivery of true value to the business.
In outsourced application development projects, agility and business contribution are critical.
Nearshoring – that is, using an IT partner within the Americas, including such locations as Brazil, Mexico and Argentina – represents some clear advantages over offshoring, especially when delivered with Agile methodologies and Lean principles.
Nearshoring has proven to be a crucial enabler of Lean and Agile development, while reducing the Total Cost of Outsourcing (TCO) and taking advantage of time zone, geographical and cultural similarities.
Companies that work with nearshore partners routinely see better client-provider communication, faster time of delivery and greater value in their application development projects, ultimately resulting in better quality software being delivered at the end of these projects.
Here’s a quick run-down on the reasons why nearshoring, as an enabler of Lean and Agile development, offers these clear advantages over offshoring.
Because of the geographical distance between the provider and the client, typical offshore projects involve the need for extensive documentation outlining requirements for the application, with significant room for misinterpretation and delays due to differences in time zones.
The time and resources devoted to writing this documentation and securing agreement on its requirements translates into considerable waste being generated in the overall project.
Nearshoring enables direct, real-time communication between the client and the provider, often without the need for this cumbersome documentation.
Projects are executed with the utmost transparency as clients are kept up-to-date on every single aspect of the development process.
The directness of communication makes it possible to identify any potential misunderstanding immediately, before it becomes an issue that creates additional work and investment in resources.
The elimination of the waste created by costly and time-intensive documentation is a crucial benefit of Nearshoring, and it just so happens that the elimination of waste is also a key tenet of the Lean philosophy – thus, Nearshoring, in this case, acts as a true enabler of Lean development.
Beyond the waste generated in the form of extensive documentation, in many offshore development engagements, time difference can be a significant hurdle to the efficient completion of projects.
The lack of overlap in working hours creates significant lag in the ability of the provider to interact with the client, thereby hampering the goal of using Agile development to deliver better software at a faster pace.
Because of the overlap in working hours between the client and the provider, Nearshoring reduces waiting time for answers to questions or access to deliverables to the bare minimum, increasing the efficiency of every development project. This enables better realization of Agile methodologies like Scrum, as sprints are completed faster and each iteration of software is delivered without delay.
Development teams can make on-the-fly changes with just a phone call, while clients can approve the applications, deliver new specifications and address any issues with the requirements in minutes – not hours.
Greater business value
The efficiency and improved communication made possible by Nearshoring all add up to one thing: greater value for the client’s business.
Nearshoring enables better employment of Lean principles, which emphasize providing value through the elimination of waste (excessive documentation, features that don’t impact the business) in the value chain.
Projects are delivered on-time and on-budget, with a total cost that typically ends up being lower than those touted by offshore providers.
Most importantly, the client doesn’t pay for costly features it doesn’t need, and receives only those that will add value to the business.
The truth is that offshore engagements, while leveraging the huge difference in labor costs between the eastern and western hemispheres, often result in inefficient delivery of applications and excessive waste in development cycles.
Nearshoring provides an opportunity for a more efficient development process and value-driven applications, ultimately resulting in far better business results for the client.
Leonardo Mattiazzi is Vice President of International Business for Ci&T, a global IT services company headquartered in King of Prussia, Penn., and Sao Paulo, Brazil.