In recent years, there has been a shift taking place in software development where U.S. companies are choosing to nearshore rather than outsource to far off countries like India. The idea here was to keep development activities closer to home in Central or South America.
Although there are plenty of good nearshoring options south of the border in Mexico and other Latin American countries, very few companies are aware of nearshoring options north of the border in Canada.
Both offer good value for money but finding the right one for your next project will depend on a variety of variables. As a result, it’s important to look at the pros and cons that every nation has to offer when it comes to nearshoring software development.
Latin America: Advantages & Disadvantages
There are many advantages to nearshoring to Latin America, the primary one being cost. Countries like Argentina, Brazil, Chile, and Paraguay offer highly cost-effective quality software development services.
They also come with the added benefit of being closer to U.S. time zones. While Mexico shares the same Pacific and Mountain time zones, others like Argentina and Brazil are on Atlantic time.
As these countries aren’t well known in the outsourcing world like their counterparts in Europe and Asia, so they have been growing in this space for over a decade without making much noise (and that has been an advantage for companies in North America).
The companies in these countries also want to maintain their growth, so their long-term commitment and loyalty are high. But choosing to go south based on cost alone won’t be the best idea as countries like Chile and Argentina are quite far away. This means that you will incur significant costs when you're factoring in travel expenses.
Furthermore, Central and South American countries are not known for their political stability, so choosing to nearshore to a country that is deemed unsafe to vacation in will mean that you’re also taking on a lot of risk.
There will also be a language and cultural barrier that must be overcome (although you may have been talking for quite some time). Even if developers understand and speak English, there will be times where certain nuances won’t be understood as a result of English being a second language.
Canada: Advantages & Disadvantages
Nearshoring development to Canada comes with some of the same advantages offered by Latin America. For example, Canada shares all the same time zones as the U.S. (Eastern, Central, Mountain, and Pacific).
The currency exchange rate (about 30%) also makes it a cost-effective option for American companies. Furthermore, cities like Vancouver are already set up with top tech talent to meet the needs of the U.S. market.
Unlike the neighbors to the south, Canada has long maintained a stable political and social environment. Additionally, the government is also encouraging skilled migrants, so it offers U.S. companies an alternative when they run into H1B-visa issues concerning current foreign workers.
Except for French-speaking Quebec, the rest of Canada speak the same language and have a similar culture. Further, as a result of the NAFTA agreement, companies nearshoring their development can rest easy as the intellectual property will remain private and respected.
But regardless of whether U.S. companies decide to nearshore to Canada or Latin America, development teams have to vetted by a stateside nearshoring project manager to ensure that you only partner with a well-established reputable team.
Although any type of outsourcing comes with a certain level of risk, nearshoring offers the opportunity for you to quickly get over there for a face to face meeting.
As Canada offers a safe environment coupled with the lack of a language barrier and lower costs, it certainly has a huge advantage over its nearshoring competitors to the south.