Nearshore Benefits – Cost Savings
This blog is the third in a series of posts about the benefits of partnering with a Nearshore Software Development team.
When engaging in an outsourcing partnership with a nearshore team, many companies are looking to save money or have more flexibility with resources (as compared to hiring a full-time US-based engineer).
Below are some cost-related challenges companies face when using internal resources… and these are just to name a few:
– Effective cost of onboarding a new employee or new team member. Sometimes the onboarding cost can be significant in cost and time; especially when the team that would mentor the new team-member is swamped themselves.
– Overhead cost associated with having a full-time employee in the US. Besides the engineering salary, there are ongoing, overhead costs associated with having engineers on staff; including Payroll Taxes, Health Insurance, Retirement Plans, Vacation, Sick Leave, Profit Sharing, etc…
– Managing the cyclical nature of software development can be a real problem for software development teams. There’s a need to throttle up or down on resources, depending on where the team is at with the project. And what do you do with all those extra resources after the product moves to production?!
These issues call all be mitigated by partnering with a nearshore team.
The salary costs alone for a US-based engineer range from $107,000 to $137,0001 (not including all of the overhead expenses). The average cost of hiring a full-time engineer in Mexico is approximately 20% less than a US engineer. If you include overhead expenses, it will result in a savings of over 30%.
However, the true benefit is in the fact that you don’t have to keep the engineer on staff after the project is complete. This is where companies can really benefit financially if managed correctly. Cost savings can be realized by simply hiring engineers to launch products or implement enhancements for a specific time period.
The best part of this whole story is that savings can be realized without sacrificing quality – the most important facet of software. Especially with your team at the same time zone, and only an afternoon flight away, there is no reason to exchange quality for cost savings.