A nearshore LatAm Development Center is a dedicated facility located in Latin America that as a client you create by hiring nearshore software developers and other specialists engaged in development of digital products and other tech-related tasks at competitive rates.
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Contact Us Today!By choosing this option, you will:
- Operate the nearshore facility under your brand.
- Expand your business operations into a new region.
- Tap into Latin America’s large talent pool at competitive rates.
- Reduce operational costs by leveraging a lower cost of living.
- Benefit from favorable government incentives designed to attract foreign investment.”
In so doing, this form of cooperation entails working with a service provider based outside of the client’s home country.
The nearshore vendor provides a dedicated office that is staffed with a team of cross-functional specialists, including project managers, team leads, software engineers, QA specialists, and UI/UX designers. Optionally, additional roles, such as recruiters, marketing specialists, and administrative staff, can be included as needed. The client determines the team size and composition. Coordination between onsite stakeholders and nearshore teams requires A local project manager who thoroughly understands the business requirements and development processes ensures seamless collaboration between the onsite stakeholders and the nearshore team.
When establishing a nearshore LatAm development center office in a foreign country, you create a legal entity that operates under your brand and officially represents your interests on the market. Your local partner independently deals with the legal regulations, accounting, HR-related issues, and other administrative tasks. This eliminates the need to send operational resources overseas to manage problems like office repairs and payroll taxes or learn a new language to navigate local regulations.
Why Set Up a Nearshore Development Center (NDC) in LATAM
A nearshore LatAm development center is primarily established as a way to expand the company’s operations in the face of difficulties finding talent in locations within the US, which is why companies are making the bold decision to turn to Latin American talent. Finding software engineers is a complicated process. The requirements are high and when doing the studies of where to grow, Latin America stands out as a place where US companies believe they can create centers of engineering excellence.
US companies are embracing the nearshore LatAm Software Development Center concept for strategic reasons. Before that, many companies went through a phase of strong IT outsourcing. Many important applications were – and continue to be – developed by third-party companies. This results in relevant know-how for the further development of business models within the framework of digitalization flowing out the business.
In response to that, companies have therefore decided to systematically rebuild specific know-how and development resources – and this was the birth of the nearshore development centers in Latin America. Companies want to make the best use of the competencies available within their ranks.
How to Establish a Nearshore Software Development Center in Latin America
Setting up a nearshore development center requires some initial legwork, but it’s a worthwhile investment with substantial long-term gains.
Step 1. Define your Needs
Before establishing a nearshore development center, business leaders must take some time to consider their vision, requirements, and scope of work for the projects at hand. Key considerations include:
- The specific tasks to be outsourced.
- The ideal country or region for the center.
- The number of employees needed.
- The required expertise for the team members.
They must consider the specific tasks to be outsourced, the ideal country or region for the center, the number of employees needed, and the required expertise for the team members. Other important considerations to address at this stage include:
- The issues that the nearshore development center will solve.
- The available funding for the project.
- The desired level of oversight needed.
- The legal structure of the entity.
- The desired outcomes.
Well-defined needs and goals help business leaders better understand which nearshore development center model they should choose and determine the right resources to allocate for the project.
Step 2. Select the Ideal Location
Not all Latin American countries offer the same conditions for establishing a nearshore LatAm development center. For example, imagine establishing your local office in a small town with limited access to relevant professionals or high speed internet. The same applies to choosing the correct country as well. You can access low rates and not deal with the bureaucracy but eventually face a skills shortage. And that can lay a heavy burden on the project’s timelines.
Therefore, it is necessary to shortlist a couple of nearshoring destinations by specific criteria. Consider factors like:
- Affordable development rates.
- Low office rent, maintenance, Internet costs.
- Access to a large pool of skilled tech professionals.
- Favorable economic environment with minimal bureaucracy.
- Shared values and English proficiency.
By the way, we’ve already done the research for you.
Discover our curated list of top nearshore software development countries in Latin America.
Step 3. Hiring Legal Consultants
Hiring a local lawyer who is highly aware of national law is crucial for navigating the legal landscape in your country of choice. A legal consultant will help you with local compliance, contract negotiation, drafting legally sound agreements, obtaining necessary permits and licenses, and mitigating potential legal risks.
Each country or region has its unique set of laws and regulations, including employment laws, tax regulations, and data privacy rules, that companies must understand before establishing an nearshore LatAm development center. This will allow avoiding any legal issues or additional expenses.
Step 4. Registering as a Legal Entity
The next step is registering your business as a legal entity in the chosen country. This usually includes selecting the appropriate legal structure as well as preparing and submitting the required documents to the authorities.
Step 5. Partner with the Right Vendor
Partnering with a nearshore vendor allows for better and faster recruitment, avoiding administrative and management overhead, ensuring better flexibility and scalability, and mitigating security and legal risks through contracts. The parent company entrusts all human resources, administrative, and infrastructure processes to the nearshore partner and saves a lot of resources by not having to invest in office space, infrastructure, and tools.
The right nearshore software development company is the one that demonstrates reliability and has a proven track record of successful projects.
When choosing a vendor consider the following:
- A proven track record of successful projects.
- Timely communication and support.
- Adherence to legal and regulatory standards.
- Ability to adapt to your specific requirements.
- Strong English language skills among team members.
Step 6. Choose the Suitable Model
You can leverage nearshore LatAm development center services using different cooperation models with the chosen vendor. They include Build–operate–transfer (BOT) and Managed NDC business practices. You need to navigate the peculiarities of each model to make the right choice and invest in the most appropriate solution for your project. Let’s have a quick overview of the two options.
BOT model
| BOT | MANAGED NDC |
| The client contacts the local vendor in a predetermined nearshoring destination. The latter handles the organizational part of setting up a development center. They also hire employees, assemble the necessary infrastructure, and solve legal issues for the client’s company. In the final stage, the vendor transfers the entire operations to the client. | This model also requires a vendor to set up and operate the nearshore development center on behalf of the client. The vendor is responsible for handling the administrative and organizational parts and managing payroll and accounting. Thus, we can genuinely talk about the client establishing a branch office with a managed nearshore development center in a foreign location. |
Step 7. Organize Workspaces
If you plan to start working in a separate office, renting one and equipping it with proper infrastructure is necessary. You’ll need to collaborate with local real estate professionals to shortlist the best locations for the team. When you find a suitable office space, purchasing and maintaining hardware and office equipment is necessary, as is establishing backup systems, and security measures.
Step 8. Initiate the Candidate Recruiting Process
To start the recruitment process, you need to create job descriptions for all vacancies and transfer them to the service provider. This data enables researchers to scan the labor market and identify the pool of relevant candidates. When recruiters find the best talent for your company, the next step is to interview them and pick the most appropriate candidates. Finally, evaluate both the soft and hard skills of your future employees.
You must also source local administrative staff to manage ongoing tasks, finances, taxation, legislation, and other aspects of the NDC’s proper functioning.
Step 9. Hire the Team
Once you’ve finished the candidate selection process, send job offers to the best talents, and let the first employees get to work. Upon arrival in your company, ensure a productive onboarding process for all the new hires.
Step 10. Get the Project Started
Everyone on the team should know their area of responsibility and their role in the project. Remember that every developer, HR manager, or accountant needs to realize whom to escalate any questions and suggestions.
What happens upon the project’s completion or failure? If the project is closed, the company must dismiss every team member, remove the legal entity, and terminate local legal contracts without violating local laws. It is necessary to fulfill all obligations to the vendor and other interested parties.
It is worth mentioning, however, that current conditions in the labor market can cause additional challenges. Many software developers and tech experts are accustomed to remote-first policies and work from home. Creating the nearshore development center may become rather complicated as they are looking for positions that will allow them not to attend offices. However, there are alternatives. One is to obtain a dedicated team model service, which resembles the nearshore development center’s offering but lets you avoid some of the pitfalls.
5 Reasons to Partner with an IT Staff Augmentation Firm to Set Up your Nearshore Development Center
Establishing a dedicated nearshore development center in another country requires significant time, effort, and financial investment. Another reason business leaders hesitate is the legal and HR challenges. Partnering with a reliable tech provider lifts all these risks off your shoulders and allows you to leverage additional benefits such as:
#1: Shorter Time to Hire
Launching a nearshore LatAm development center lets you go outside your “four walls” and add talent from a diverse pool of technologists, for example, Latin America has a total of 2 million ICT specialists. Thanks to this, your company can significantly reduce the time required to backfill vacancies.
Most nearshore software development companies have large internal recruitment databases and networks in multiple Latin American countries and, as a result, can provide access to a vast talent pool. This, in turn, allows them to quickly source and onboard skilled professionals. For instance, at Next Idea Tech, it takes two to three weeks to fill a position, even if you are looking for experts with specialized domain knowledge or niche technical skills.
#2: Simple Scaling
If you err on the side of being risk-averse, a nearshore software development company is the way to go. Scaling your remote unit up and down is easy – you can start with one or two nearshore developers to take the approach for a spin and then scale up as you see fit. You can hire more specialists or disband the team if you decide to close your nearshore LatAm development center. Vendors typically offer flexible engagement models where you only pay for the hours your nearshore employees invested in your project.
#3. Focus on your Core Business Operations
It’s in every business’s interest to ease the burden of HR, legal, and operational processes and focus on strategic initiatives. By delegating these processes to a nearshore vendor, you can ensure that your in-house resources are not stretched thin. This focus can increase productivity and innovation within your core business areas, driving overall growth and competitive advantage.
#4. Mitigating Security and Legal Liability
Setting up an office in some countries can turn into a nightmare as not all of them are friendly foreign businesses. In addition, you will have to navigate local regulations for making at least a step towards setting up a physical office. To mitigate the related risks, businesses often hire a partner in the chosen destination who will bear a significant part of the responsibilities related to the organizational side.
Trustworthy nearshore firms adhere to stringent security protocols and compliance standards to protect sensitive data. They are well-versed in the latest regulations and legal requirements, ensuring that your projects are compliant with laws in your country of choice. Working under your brand, you can control the flow of data and ensure its security and integrity. In addition, the vendor provides that no third party has access to intellectual property.
#5. You Hire the Best Talent
Instead of hiring individual programmers in one of the popular hubs, you can establish office space for employees and thus increase the chance of attracting the best local talent. Likewise, your company’s local presence in one of the countries where you plan to source candidates is a good strategy when you plan to assemble a team or a couple of groups there. So, you can forget about signing individual contracts with freelancers or individual developers from different companies. Instead, just build your team under one roof and allocate tasks.
Hire Developers in Latin America With Next Idea Tech’s Nearshore Software Development Services
Many US companies that have already come to hire Latin American talent have given very strong signals that this is an area where they can grow and they see it as a solution for many years.
At Next Idea Tech, we have enormous process and IT knowledge in the custom software development sector. As a leading nearshore software development vendor, we can be your official development partner within your organization’s IT set-up and, as such, a key cog in your IT strategy.
Our flexible model empowers you to maintain control over processes, communication, and software development methodologies.
Let’s connect and discuss how we can help you build your nearshore LatAm development center in 2024.
