Harnessing the Power of Nearshore Recruitment

by Nick Shah
May 18, 2023
Harnessing the Power of Nearshore Recruitment

In September last year, when we were still in the early stages of the economic slowdown, and the war for talent was raging, my advice for business leaders was to go global with their talent needs. Leveraging a global talent pool and the advantages of a round-the-clock development cycle could significantly lower costs and improve system uptime for businesses that needed to shore their defenses against the incoming economic slowdown.

Eight months on, the recession is upon us. The economy has slowed down even further, consumer spending activity is weakening, the GDP continues to contract, and experts predict that this situation is not likely to change till Q1 of 2024, at the very least. The stress the global markets are under is clearly visible when we look at sectors such as banking and finance.

If the idea of going global with business operations was insightful then, it’s imperative now. With cost-optimization measures in full swing across industries and verticals, it’s more important now than ever to implement solutions that will help companies keep their spending in check while keeping their business competitive.

Nearshore recruiting is that solution.

What is nearshore recruiting?

Thanks to the great strides in online collaboration and communication technology, businesses today have the option of looking beyond their geographical confines to discover new talent. The pandemic made it very obvious that we don’t need to be in the same physical space to work together. This means you can take your scouting to talent-rich destinations outside your country and find the skills and build the teams you need to get the job done.

But offshore recruiting has its challenges as well. Your projects are operating in conflicting time zones, your teams are working odd hours, and you may be faced with the legal and cultural challenges of working with people from the opposite side of the world.

This is why the strategy of nearshore recruitment—the practice of sourcing talent from neighboring countries, typically sharing a similar time zone, cultural traits, and often a language—works so well. Nearshore recruiting presents a host of benefits, particularly for tech companies that need to optimize their operations and improve productivity.

Nearshore recruiting comes with significant benefits…

These are lessons that I learned first-hand while recruiting through multiple labor crises over the years, the most recent being the pandemic. As labor scarcity spread across talent markets during the lockdowns, we were forced to get creative with our recruiting strategy. We developed expertise in recruiting for US employers from geographically strategic and talent-rich markets in Central and South America. By investing in these markets, we were able to build world-class talent pipelines and learn valuable lessons in delivering quality global talent management.

[Read more about PTP’s expert nearshore talent management and how we can give you the team you need to succeed]

Real-time Collaboration

Real-time collaboration is especially crucial in tech-related fields where real-time problem-solving and agile methodologies are vital to driving innovation. By operating within the same or similar time zones, nearshore teams can work synchronously, effectively enabling real-time communication and collaboration. This results in quicker decision-making, efficient problem-solving, and the seamless integration of workflows.

Accenture, the global professional services company, has been implementing a nearshoring strategy for many years now. They have established several centers in Latin America, including Brazil, Argentina, and Costa Rica, to provide services to their clients in North America. The shared time zone and the high level of technical expertise in these countries make them attractive locations for nearshoring.

 

Cultural and legal compatibility

While offshore recruitment might offer cost savings, it often presents challenges such as cultural differences, language barriers, and issues related to intellectual property rights and data security. In contrast, nearshoring typically implies less cultural and linguistic diversity, facilitating smoother communication and understanding. Moreover, neighboring countries often share similar legal and regulatory frameworks, providing an additional layer of security for businesses.

Beyond the quantifiable benefits, nearshore recruitment can also foster stronger relationships and improve team dynamics. The proximity and cultural similarities can lead to better understanding and empathy among team members, facilitating a sense of camaraderie. This is critical in a technical environment, where collaborative problem-solving and innovation are paramount.

 

Cost-benefit analysis

The total cost of ownership (TCO) – a more comprehensive measure of cost – is often lower with nearshoring than other recruiting options. TCO not only includes direct costs like salaries and infrastructure but also indirect costs such as those arising from communication issues, productivity loss due to time zone differences, and potential quality issues.

When these factors are taken into account, nearshoring can prove to be a more cost-effective recruitment strategy.

 

Bridging the talent gap

Despite news of big tech layoffs, we’re seeing significant talent shortages in many IT fields. Nearshore recruitment provides access to a larger talent pool, offering a wider range of skills and expertise. This can be particularly valuable in specialized technology areas such as cybersecurity, artificial intelligence, and data science, where the demand for skilled professionals often outstrips supply.

IBM, for example, has established multiple service centers in Eastern Europe, including Poland, Hungary, and the Czech Republic, to serve their clients in Western Europe. These countries offer a wealth of technical talent, along with cultural and geographic proximity to Western Europe. This approach has enabled IBM to deliver services more efficiently and effectively.

In the context of business continuity planning, nearshore recruitment provides an added advantage. In situations where local operations are disrupted due to unforeseen circumstances such as natural disasters or political instability, having a nearshore team can ensure that work continues with minimal disruption.

 

… and a few challenges

However, it’s important to note that nearshore recruitment comes with an additional nuance that requires management. These can include managing a distributed team, ensuring clear communication, and addressing potential legal and regulatory issues.

But with proper planning and management, they can be effectively addressed.

Language barriers: While not true in all instances, there are some cases where language barriers and cultural differences can make maintaining a nimble working relationship difficult. However, this is not always the case as there are many neighboring countries that exhibit cultural similarities.

Smaller talent pools: While nearshore outsourcing provides a larger talent pool than onshore outsourcing, it’s not as large of a talent pool as offshore outsourcing.

Not as convenient as onshore teams: In some cases, it’s not as convenient for teams in different locations to work together. For example, in software development outsourcing — during a deployment where rapid response and troubleshooting are required — it may not be feasible for two people in different locations to work together and be able to provide a quality software product. However, organizations can often resolve these IT service issues with pre-determined, rotating on-call schedules.

 

Conclusion 

Nearshore recruitment offers a range of benefits that make it an attractive strategy for tech employers. It is the smart solution that businesses need to overcome the challenges presented by today’s economy and labor market.

Most experts agree that the recession is only months away. The debate around the debt ceiling remains unresolved. As economic uncertainty continues to reshape the business landscape, nearshore recruitment stands out as a promising approach to sourcing and managing talent in the tech sector. All you need is the right talent management partner who can help you build the best teams.

Nick Shah is the Founder and President of Peterson Technology Partners (PTP), Chicago’s premiere IT staff augmentation agency. With his relationship-focused mentality and technical expertise, Nick has earned the trust of Chicago-based Fortune 100 companies for their technical staffing needs.

 

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