Quick Insights Into Emerging Nearshore Outsourcing Markets

Nearshore outsourcing is on the rise. The numerous advantages it offers to businesses seeking to optimize their operations and reduce costs while maintaining high-quality services are considered to be the backbone of its momentum in recent years.

As we explored in the previously published article on our blog, Latin American countries such as Uruguay are one of the emerging outsourcing destinations. In this article, I want to delve into some quick insights from more nearshore outsourcing markets from around the world starting with LATAM. 

Latin America

As I have mentioned, like every other region on this list, LATAM is fast becoming the go-to destination for corporate outsourcing for North American companies looking to take advantage of the proximity, cultural affinity, and large pool of skilled professionals proficient in English and other languages in South America.

Uruguay is a strong leader in the technology industry in LATAM.

In fact, according to Statista, the IT outsourcing market in LATAM is expected to generate a revenue of US$15.92 billion this year as the third most popular outsourcing destination and the second-strongest software engineering growth market globally.

Countries like Uruguay, Mexico, Brazil, Colombia, and Argentina are emerging as key players in the nearshore outsourcing landscape in the region due to the proliferation of Tech hubs like the ones in Montevideo in Uruguay, Guadalajara in Mexico, and São Paulo in Brazil. 

As an example, In the case of Uruguay, the effort of the country’s government to expand its tech sectors is earnestly underway and so far there have been serious results to boot. 

In recognition of these efforts together with those of other LATAM countries, Kearney, in its 2023 Global Services Location Index, predicted that digital exports in Colombia, Argentina, Brazil, Chile, Mexico, and Uruguay will generate over $140B annually by 2030 compared to $34B in 2022.

Eastern Europe

Aside from North American companies outsourcing to Latin America, in Europe, nations such as Poland, Ukraine, Romania, and Hungary are becoming increasingly popular as outsourcing destinations for European companies. These Eastern European countries boast a highly educated workforce, competitive labor costs, and favorable time zones that overlap with Western Europe. Cities like Warsaw, Krakow, and Bucharest are emerging as powerhouses offering a wide range of IT and business process outsourcing services.

Poland is fast becoming the top outsourcing destination in Europe. 

According to recent data, the revenue of the IT outsourcing industry in Central and Eastern Europe is growing 4-5 times faster than the global average by 20-25% per year versus 5% per year. 

The huge number of technical universities and the suitable business atmosphere are two contributing factors stimulating this growth. In fact, despite the ongoing war within its territory, Ukraine’s Kyiv continues to be among the most sought-after cities in the region for outsourcing and its tech market is expected to grow to 100K+ software development professionals by the end of the year. 

Southeast Asia 

While traditionally known for offshore outsourcing, countries like Vietnam, the Philippines, and Thailand are also emerging as nearshore outsourcing destinations, particularly for businesses in the Asia-Pacific region. 

These countries offer competitive labor costs, a large pool of English-speaking professionals, and a relatively favorable business environment. Tech hubs like Ho Chi Minh City, Manila, and Bangkok cater to a diverse range of industries that include software development, digital marketing, and back-office support services. 

Outsourcing here is fairly cheaper due to the large pool of talent.

Software development particularly in this region is infamous for being of low quality, and although this can be mitigated with proactive strategies like the ones in this article, this is still something to keep in mind.

Final Thoughts

In conclusion, this article represents an overview of the countries and regions where founders are ‘nearshoring’ their IT projects to reduce operational costs. As these emerging markets continue to evolve and mature, I expect them to play an increasingly significant role in the global outsourcing marketplace. 

All in all, I hope this piece serves as a valuable resource for you if you’re considering available nearshore outsourcing options. In addition, If you find it helpful, you’ll likely find our founder’s guide to software outsourcing useful too. 

Finally, you may reach out to us today directly with the form below to request a free consultation session if you need an outsourcing service provider.  

Need to scale your software development efforts?

Download our SMART Framework Guide