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Nearshore Outsourcing Is Up During Covid-19. Here’s Why.

nearshore outsourcing software development

The Covid-19 pandemic has brought about two simultaneous but seemingly paradoxical trends: remote work and deglobalization. Leaders trust their team members to deliver from afar, but they’re not so confident these days in global supply chains. 

While manufacturing supply chains have faced particular disruptions, the software development sector has also come under scrutiny. The halt in global travel has hampered U.S. companies’ access to many overseas programming hubs.

With that said, no industry experts we are aware of foresee a slowdown in the offshoring of programming work. Large companies and startups alike will continue to tap into less expensive labor markets.

How can leaders square the trend toward global software development with its supply chain risks? Through a strategy known as nearshore outsourcing.

Nearshore Outsourcing in Software Development

In the context of software development, nearshore outsourcing is the exportation of programming work from mature markets to developing ones in relative geographic proximity. A Texas-based SaaS company is engaging in nearshore outsourcing when it hires programmers in Mexico, for instance.

Interest in nearshore outsourcing among the Fortune 500 has skyrocketed during the pandemic, according to global consulting firm MJV Technology & Innovation. “We have seen that the pandemic has accelerated deglobalization,� MJV CEO Mauricio Vianna says, “as manufacturing and development in farshore locations have been suspended. Companies are shifting to nearshoring to solve the problems of a hyper-globalized production chain.�

But what, exactly, separates nearshore from farshore outsourcing? And what does it take to outsource to nearby markets effectively?

Nearshore vs. Farshore

The distinction between “nearshore� and “farshore� isn’t always clear. One key variable is proximity: Executives are looking for locales that they could reach within a few hours’ plane ride.

American business leaders can’t hop on a plane to Siberia and arrive the same day. Companies like MJV have offices across South America, which is much more reachable from North American cities.

Another consideration is the time difference between office locations. “I believe the biggest of the benefits of nearshore over farshore outsourcing is the proximity of the teams,� Vianna explains. “By being on the same or in a very close timezone, farshoring problems like working hours, alignment meetings, and longer trips are avoided. Besides, companies don’t need to wait twelve hours to get an answer or talk with the development team.�

A third is cultural similarity. American software developers will have a much easier time relating to their Canadian counterparts than, say, those based in China. “Education, business practices and work-life customs are very similar in America and Canada,� notes Evelyn Ackah, founder of Ackah Law, a Canadian business immigration law firm. “Most American project managers, as well as end-users, would not recognize an American product that was developed in Canada.�

Common Nearshoring Mistakes

To be sure, there are risks associated with nearshore outsourcing. Whether a company is pivoting its software development from either a farshore location or an in-house team, these must be mitigated. 

Just as in a farshore outsourcing project, cost savings are top of mind for executives. But vetting a nearshore partner who can deliver the required results on the desired budget is where many companies fall short. “Your choice of partner should not be a decision based solely on cost,� warns Vianna.

Security is also critical. Any form of offshoring can expose companies to data security liabilities. Due diligence is necessary to ensure that potential partners are compliant with relevant data privacy and security regulations in both local and international markets.

Beware, too, of labor laws. Nearshoring company MobSquad was recently accused of misusing a temporary foreign worker program. When in doubt, ask for proof of compliance. 

Finding a Nearshore Outsourcing Team

Nearshore outsourcing offers all the benefits of outsourcing without many of the headaches of a foreshore location. Still, cultural fit and production capacity should not be overlooked.

Vianna recommends looking for outsourcing partners with multidisciplinary teams that are familiar with modern programming languages. And don’t forget to check for value alignment. Ethics matter, wherever a development team is based or whatever its contribution. 

Finding a nearshoring provider that ticks all the boxes is just as tough as locating one that specializes in farshore outsourcing. Scrutinizing another company’s culture, creative philosophy, and values is no small task. But with any partner, checking for fit on all three fronts must be a priority.

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computer programmers Culture Entrepreneurs nearshoring Productivity Recruitment remote recruitment software development Tech tech sector visa ban

Why Nearshoring is Vital to the U.S. Tech Sector Right Now

nearshoring

In June 2020, President Trump temporarily suspended work for H-1B visa holders in the United States. Demand for top-tier tech talent was already fierce in the U.S. before the decision. Still, the ban has placed significant additional pressure on companies that can no longer rely on sourcing international workers. Here is why nearshoring is vital to the U.S. tech sector right now.

The tech sector hires 85,000 foreign specialists every year and finds alternative ways such as nearshoring to sustain its workforce.

Before the Ban

An option prior to the ban, nearshoring, has been emerging as an attractive solution, particularly as remote work becomes even more commonplace in the tech sphere. Nearshoring is when companies hire teams overseas but in locations close by and share a time zone.

Not only is nearshoring ideal to harness foreign tech talent, but it can also save businesses up to 80 percent on costs. Considering many companies are struggling financially because of the COVID-19 pandemic, such savings are a much-needed lifeline.

Big data experts, programming consultants, and digital strategists from software engineers, the scope of potential nearshored roles, are vast. Here’s why nearshoring is vital to the U.S. tech sector right now:

The Value of Nearshoring

As many businesses have adjusted to remote practices due to the pandemic, most people are already familiar with operating effectively at a distance so that they can make a seamless switch to nearshoring.

Unlike offshoring, nearshoring focuses on locations within proximity to the U.S. As a result, there is greater time zone compatibility between businesses and nearshored workers, meaning teams can collaborate and communicate in real-time via video, in documents, or via digital channels.

Likewise, nearshore services allow for heightened business agility because companies can request specific deliverables that may not be possible through their in-house teams. Companies can, therefore, develop and test products and services at a faster pace and iterate accordingly.

These agile processes create greater flexibility among teams, as well as shape a ready-to-scale workforce. By accelerating the time to market and having an on-the-ground presence in international markets, nearshoring helps identify places to expand into and poises companies for quicker growth.

Diversity also comes into play with nearshoring. With studies showing that diversity influences stronger, more creative teams, companies that opt to work with people from different backgrounds can benefit from a new perspective on solving problems.

Considering that many businesses prioritize their diversity and inclusion efforts in the new normal, nearshoring is a powerful way to boost diversity without asking people to leave their homes, families, and cultures.

Another noticeable draw is that nearshoring reduces expenses for U.S. startups. For early-stage ventures in Silicon Valley or other tech hubs, nearshoring is far more cost-effective, as salaries and living costs are lower than in the U.S. Not to mention, companies don’t have to cover visa sponsorship or relocation packages associated with the H-1B visa.

Nearshoring Hotspots for the U.S.

Latin America is a clear choice for U.S.-based companies facing obstacles related to the H-1B visa suspension.

The region has a maximum time difference of a few hours, and travel between many Latin American cities and the U.S. requires only a short flight.

English-language skills are also impressive there – Peru, Chile, Mexico, Ecuador, and Brazil have all surpassed China in English proficiency.

Meanwhile, countries like Panama and Colombia have ongoing national plans to reach bilingualism.

The top five Latin American spots for nearshoring include Argentina, Belize, Nicaragua, Puerto Rico, and Colombia. Argentina has an impressive track record of high education rates, along with the best English proficiency in Latin America, and the promise of 5G capabilities coming soon.

Belize is home to a workforce with experience in the tourism industry, so it is accustomed to North American culture. Nicaragua is experiencing elevated investment from the U.S. and has committed to having more technology in education, meaning younger generations are tech-savvy and show an interest in the field.

Puerto Rico already has tech companies like Microsoft and GE on the island and has plans for a new artificial intelligence technology center. Meanwhile, Colombia has a ministry dedicated to furthering science, tech, and innovation in the country, and is home to the unicorn on-demand delivery company, Rappi.

Colombia boasts an impressive number of highly-skilled developers, too; between 2001 and 2013, the country’s pool of IT professionals hit 340,000.

How to Choose a Nearshoring Partner

As opposed to freelance developers and tech workers, nearshoring offers companies a strategic partnership to source teams. Nearshoring partners serve as mediators to help companies find and vet people for projects ranging from small technical fixes, product testing, or full product launch.

They also bring to the table their previous business experience and technical acumen, full remote operation capabilities, formal structure, high compliance levels, and support for the team to thrive and deliver.

When looking for nearshoring partners, companies should first identify what skills they need for the given projects. They should then approach nearshoring partners that have a deep understanding of these skills and target markets.

It’s also worthwhile if the partners have experience working with developers and engineers with complementary skill sets.

Additionally, it’s useful to see testimonials from companies in similar industries that have worked with the nearshoring partner and recommend their services. In short, look for experience and social proof.

At the same time, companies are responsible for doing their own homework and researching the locations they want to nearshore in. Being informed about the political situation, legislation for nearshoring, tech infrastructure, data capabilities, education, and quality of life in the desired areas, is useful when deciding where to invest in teams.

Opportunities and Challenges

International workers are the backbone of tech in the United States, and abruptly preventing them from accessing the country is not a sustainable option for companies. Amid the visa ban and pandemic, developers’ demand remains high – no doubt, due to companies moving online to stay afloat during quarantine measures.

While Trump’s order certainly blocks access to international talent in the U.S., it actually opens the door for foreign developers with niche skills that aren’t always available locally.

As companies realize the perks associated with nearshoring, it’s likely to become a long-term model for leveraging overseas workers and markets. Nonetheless, companies need to move quickly to secure their nearshoring partner of choice and maintain business continuity for clients and stakeholders.

Image Credit: iStock

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10 Examples of Software Development Failure

Software has become so ubiquitous in our 21st century lives that we often take it for granted. We assume that it’s always going to work when we need it. Or, perhaps even more dangerously, we don’t fully understand the negative repercussions of an error, issue, or failure.

But not everyone has the same luxury of being aloof to the horrors of a software development failure.

As someone who is closely connected in this industry – and has a pretty good pulse on where it’s headed – I’ve seen firsthand how many companies and developers have suffered from software development shortcomings and issues (some that should have been prevented and others that cropped up out of nowhere).

So as a tandem piece to an article I published a while back on examples of failure in artificial intelligence, I’m going to use this article to focus on a few software development failures – some serious and others quite humorous. The hope is that it opens all of our eyes up to just how much is on the line when it comes to software development projects.

10 Real Life Software Development Failures

We tend to think large organizations, Fortune 100 companies, and hot brands never mess up in the same ways that our smaller businesses do. But the reality is that they screw the pooch on occasion, too. And when they do, the stakes are often much higher and more visible.

Here’s a look at some real life situations where software development failures caused massive waves and lasting ripples:

Heathrow Airport Disruption

In February of this year, more than 100 flights in and out of London’s Heathrow airport were cancelled, delayed, or otherwise disrupted after technical issues compromised the departure boards and check-in systems. As a result passengers were left without the critical information they needed about their flights. On top of that, there was limited functionality for electronic tickets (which have become quite common in recent years).

While a Heathrow spokesperson issued a statement and said they couldn’t share any more details about what caused the systems to be affected and/or which systems were impacted, they did promise to continue closely monitoring their systems. (But I can promise you, for all of the calm boilerplate statements they released to the public, there was chaos and shouting behind the scenes.)

Deadly Flaw in Medical Infusion Pumps

The company CareFusion designs and manufacturers advanced medical equipment for some of the top hospitals around the world. Unfortunately, they also have their fair share of recalls. And some of them are more dire than others.

In 2015, the CareFusion Alaris Pump, which is designed to automatically deliver fluids and medicine to hospital patients, had a software error that caused the pump to delay infusion. Thankfully the issue was caught very early on, but the consequences could have been dire – potentially leading to accidental overdosing.

But that’s not all. CareFusion’s week got a lot worse when just four days later they had to issue a Class I recall for a separate line of ventilators. The issue? A software flaw that could cause patients to suffocate.

F-35 Fighter Plane Glitch

A couple of years ago, a software glitch in an F-35 Joint Strike Fighter jet was identified to have a bug. The bug actually caused planes to incorrectly detect and lock in on the wrong targets when flying in formation.

As the company explained, each of the planes flying in formation must detect a target from varying angles. But the software was unable to differentiate between one target and multiple targets. In essence, the F-35s were seeing double. (And that’s not something you want when flying in formation at high speeds and high altitudes.)

Uber Software Bug Catches “Cheater�

Okay, let’s take a temporary break from the serious ones. Here’s one that’s pretty funny (unless you’re the main character of the story, that is.)

In France, a bug within the Uber app actually revealed a man’s affair with another woman to his wife. It ultimately led to a divorce and got Uber slapped with a $45 million lawsuit.

The bug, which causes Uber notifications to be pushed to a device even after you log out of the account on a specific device, actually sent several notifications to the Frenchman’s wife – clearly outlining his rendezvous to his mistress’ flat. The wife allegedly received the notifications because her husband had once called an Uber from her phone.

Software Bug Aids in Bank Heist

In 2016, a group of advanced hackers/thieves hijacked the Bangladesh Bank System and successfully transferred out over $81 million in four different transactions. They had another $870 million lined up, but a spelling error tipped off the bank and caused these additional transfers to be canceled.

But here’s where it gets interesting.

According to a release by the Bangladesh Bank authorities, there’s a printer set up to automatically print read-outs of all transactions made. But there just so happened to be a glitch in the system (which could have been caused by the thieves, I supposed) that interrupted this printing process. So it wasn’t until several delays later that the transfer receipts were tracked down. This gave the thieves ample time to “get away� and cover their tracks.

TSB Bank Outage Locks Clients Out

When you store your money in a bank, you expect to be able to access it whenever and wherever you want. But, alas, technology doesn’t always afford this freedom. And while you’ve probably experienced a minor glitch in online banking in the past, I bet you’ve never had to go through one like this.

In April 2018, millions of TSB Bank customers were locked out of their accounts after a “simple� upgrade to the software led to a massive banking outage. The system upgrade was planned, but apparently not well enough.

Immediately after TSB turned on the new system, customers began experiencing issues logging in. Others were shown details of other people’s accounts. There were also reports of inaccurate credits and debts. Many customers were locked out of their accounts for two weeks before regaining access.

Hospital Computer Failure

Also in 2018, Wales National Health Service (NHS) experienced a widespread computer failure that led to issues accessing patient files. In many hospitals and facilities, doctors were unable to see patient files. This meant they couldn’t access X-ray results or bloodwork. It also led to a backlog in appointments, since patients couldn’t be seen and the system didn’t allow for cancellations.

A $400 Million Software Glitch

To assist in the sale of the company to Tesla, SolarCity Corp retained an investment bank. But it wasn’t until after the $2.6 billion agreement was signed that the bank, Lazard Ltd., discovered they had actually undervalued their client by roughly $400 million. While the error was too late for the SolarCity shareholders, Tesla did make an offer to provide some stock to make up for the difference in valuation.

Missile Strike False Alarm

You might remember this one, because it was pretty big news at the time. Back in 2018, citizens of Hawaii were given a state-wide alarm to take immediate cover in the face of an inbound ballistic missile strike. As you can imagine, people panicked and did whatever they could to “protect� themselves. Unfortunately (or fortunately, I supposed) it turned out to be a false alarm.

The biggest issue with the entire debacle was that it took more than half an hour for the alert to be retracted. And while investigations would later show the problem to be the result of human error, they did find some very troubling flaws in the Hawaii Emergency Management Agency’s alert origination software.

Toyota Car Accidents

A few years back, Toyota drivers began reporting a troubling issue: Their cars were accelerating without them actually touching the gas pedal. And after a few accidents, which were carefully investigated, it was discovered that software errors in the system were causing these dangerous issues.

According to reports, the software installed on these Toyota cars had a variety of issues like memory corruption, disabling safety systems, incorrect memory handling, and systems with single points of failure. Toyota eventually recalled millions of vehicles and the company’s stock price would eventually drop by 20 percent in a matter of weeks.

It’s Time to Take Software Development Seriously

Are you scared yet? (I’m kidding…)

This article isn’t meant to stop you in your tracks and make you run away from software. My intention is to remind you that software is imperfect. And yet at the same time, finding the right software development company is paramount to the success of your projects.

Software developers are a dime a dozen. Good software developers are rare. Sometimes it’s fine to outsource in-house tasks, but do your due diligence and look for an individual or team that’s both skilled and thorough. And once you find them, don’t let them go!

You can completely insulate your business from risk, but you can maximize downside protection. And a good software developer will take you a long way in pursuit of that goal.

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