Teravision | 2024 Was the Year of Nearshore Software Development

Introduction

The years post pandemic have been a roller-coaster of emotions, laboral movement and uncertainty for most industries. Most that have been given a certain immutable future have seen backtracking and in dynamics and scale of operation, with the honeymoon phase of growth long since grinded to a halt. This is especially true for technology.

The only problem with these developments is that growth can still be achieved, despite the better years going by through the pandemic. All any company leader has to do is look for opportunities to achieve the same level of growth and scale in the pandemic, but at a fraction of the cost. This is where it outsourcing can come in handy. Outsourcing it operations is this industry’s chance to maintain momentum and grow, but at a fraction of the cost. In this article, we’ll explore all the labor market circumstances that makes it outsourcing a great alternative for tech companies.

The Trend of Layoffs in Tech Stayed Throughout the Year

We mentioned before that many tech companies have been ramping down their operations post pandemic. In 2023 alone, around 260.000 employees were laid off within the tech industry, with around 64% of those layoffs occurring in Q1 of 2023. Though layoffs have slowed down since then, the trend never really disappeared. This year alone almost 85.000 tech professionals have been laid off. Comparatively, this represents around 33% of what the layoffs were during 2023, however the fact that companies are still considering laying off their talent is a sign that the costs surrounding keeping a high headcount in these companies remains a net loss for them.

Many reasons for these terminations have been proposed. We already mentioned that software development companies hired many collaborators during the pandemic anticipating major growth and effectiveness during that time, but has steadily slowed down. Others suggest these slowdowns have a direct cause, mainly due to lower stock prices, economic downturns, reduced demand and a massive adoption of AI. Regardless of the situation, one thing is certain: the economy was stated to head into one direction, and then made a hard pivot as the economy and advancements in technology began to take hold of the market.

This is still a very interesting position to be in, considering that the layoffs would suggest a lower demand for engineers and software developers, but other data shows that may not be the case.

Local Salaries are Going Down, but not for Engineers

Mixed signals is probably the best way we can describe the movement of salaries within the tech industry. Looking into this aspect, we can appreciate overall a decrease in salary levels in the North America as a whole. According to reports, compared to the rest of the region which had overall a salary increase, North America experienced a general decrease in salaries, specifically by 5.5%. However, the same reports indicate that, in spite of this general decrease, salaries for software engineers have in fact increased by 4%. What does this mean? Can there be a special demand for professionals within the field, despite the overall decrease in activity and output of the tech industry overall? That could be the case, yet we still see something that hasn’t gone unnoticed by other firms, and that there’s a severe shortage of tech talent.

Software Developers are High in Demand, but Short in Supply

The basic principle of supply and demand applies to the situation in North America perfectly, and other studies have been able to identify this reality quite quickly. Studies have shown that the field of software development is estimated to grow by 22% during the next 10 years in the United States, however the shortage of software developers will also increase. Specifically by 2026, the shortage of tech talent in the United States will reach 1.2 million. This means that over 1 million job positions across the United States will be left vacant due to there not being enough professionals to occupy them.

On top of these issues, companies who manage to find talent that fit their needs, the next challenge would be to retain them. Around 63% of software development employers cite that staff retention is the next hardest thing to do after finding them.

Remote Work is Still Alive and Well

Remote work has also had a few things happen to it, with the most relevant being the increase in return-to-office measures. 72% of companies in the United States have implemented return-to-office mandates. These mandates have had significant negative effects on their everyday recruitment activities, from suffering more employee attrition to having a harder time recruiting. These consequences were made loud and clear to company leadership, with 80% of them regretting their mandates.

Just in case that wasn’t explained enough, remote work isn’t fully dead. 65% of employees rather work remotely indefinitely, 54% of hybrid and remote workers manifesting their readiness to jump ship if they’re forced to return to the office, and only 3% of employees manifesting a willingness to return to the office for the full five day work week.

Needless to say, employees enjoy remote work, and even roles outside of the technological sphere are beginning to embrace this dynamic. This leads us to our final point

Why This is The Perfect Opportunity to Start Nearshore Software Outsourcing

As of right now, we’ve yet to mention anything about it outsourcing, nearshore it, or anything related to nearshore software development. So the main question still remains: how does any of the statistics we’ve mentioned before have to do with nearshore software development services of any kind? Well, let’s analyze this:

Latin America is one the regions with the highest amount of remote hires

If you want to find nearshore developers, Latin America is one of the best places to find them. This region is considered the third region with the most hires, domestically and abroad, in the it nearshoring sphere. This is because of the ever evolving technology sector in the region. As of 2024, there is approximately 2 million software developers in the region, giving companies a perfect outlet to begin incorporating them into their work force.

Maintain pandemic scale at a fraction of the cost

We’ve seen that the main reason for the high number of layoffs in the tech industry throughout 2023 and 2024 have been due to the rate of expansion being disproportionate to the economic realities coming after the pandemic. This made keeping a workforce that large, yet with less than positive economic outlooks on the horizon, and ineffective output. However, what if there was a possibility to maintain that scale of operation and save a lot in comparison to talent you can find domestically. Nearshore development is a way to leverage the normalcy of remote work while also benefiting from it as well. Software development outsourcing companies can also be found in your domestic market; however the cost effectiveness of this alternative doesn’t match to nearshore outsourcing companies.

Remote work is already a reality that countries like the United States are maintaining. Why not seek benefits from the dynamic as well?

Curve the talent shortage by expanding the talent pool

Outsourcing developers is a perfect way to avoid the difficult task of finding the diamonds in a small labor market by simply making the talent pool larger. Outsourced software development allows for companies to tap into talent that is currently not being fully taken advantage of in their own market. This way, those 1.2 million vacancies suddenly have more potential candidates to fill them by 2026 if it nearshoring is implemented with more frequency.

What is Your Next Step?

If you wish to begin looking for software development outsourcing services that will allow you to help scale your activities to what they once were without the increase in costs weighing you down, you can start by contacting Teravision Technologies. We’ve been in this business for more than 20 years now, and we’d be honored to be your first nearshore development partner!