Five tips to prevent IT nearshoring failure

Choose the provider based on the portfolio

The offer of IT services in LATAM is extensive, for example, in Costa Rica, there are more than 900 digital firms, from 5 employees to 500 employees, from 1 to 20 years of experience; the selection is not easy:

• Ask a friend or company that already have a successful provider rather than search in a directory, LinkedIn or similar services
• With or without a referral, elaborate your need to the firm and ask for portfolio examples of similar previous projects, similar to your needs
• Do not evaluate the portfolio just because of the beauty of how it looks like, you know why? because anyone can code and produce stylish products, exists automated generators, themes, pre-built components which are great for rapid development and delivery, but is it what you need?
• Evaluate the portfolio because the refined of the product but also on how the firm onboard the project, ask how was the process during the months of development, the communication, how the firm help others to adjust technology to reach business goals, what was the challenge, how they manage to solve it, how they work with the involved people
• Ask for the outcome or ROI results of the project, because anyone can do nice apps and websites, but, how many people are currently using it? How much time or money the customer business is saving? how many sales increased? Because a really good firm not only develop digital technology, also can help you to know the positive impact of this investment in your business and how to measure such impact
• Nowadays, it is easy to find entrepreneurs, startups, young companies with a small or none portfolio, and you might feel empathy and the desire to working with them; that’s great, small or young doesn’t mean bad, in fact, could be a great opportunity for both. In such case, find out a tech person of your trust that can evaluate the potential of the people firm, their tech skills, understand what are they good at and what they need to improve for your project, explore improvements in communications, documents, quality assurance, and project management; this can be win-win relationship

Do not avoid the face to face project kickoff

Save the budget to flight there! Be serious, It is the first time working with the firm, you have no idea who they are, how are their offices, how is the internal workflow and culture of the company. Why not take off and spend a week with them? for example from major u.s. cities to Costa Rica is 5 hours flight, $400 to $600 airfare. Latin people are very welcome to visitors in their offices. It is a promising experience for both, professional and social. Let’s be honest, it is not the same software engineer reading tickets about what needs to be developed, compared to someone who already listened to your passion, your goals, your vision; it will remember your face and what must be the final results to make you happy. Software is code differently and ready to scale up much easier if the team knows more about you and the business. In this visit be aware of:

• Take the time to make sure you’re on the same page
• Clarify timelines, milestones, payments, deliverables
• All project will have a methodology and workflow
• Understand who’s going to be responsible for what and what tasks correspond to you
• Clarify how the work progress is going to be presented and the timeframes
• Companies use to have tools for chat, communication, project planning, requirements gathering, take a time to learn and play with such tools
• Express all your expectations, IT people love that, do not leave assumptions behind
• Sketch, draw, make diagrams, document ideas and the scoping with the team
• Meet the team at a personal level, engineers still humans

Establish communication channels

Software, creatives, designers, digital firms, in general, need a lot from you to precisely build the digital product or service. All the people involved in the project must be in constant communication, being the product owner the most important. Many times, people want to be the product owner because they know a lot of the project, goals, ideas, passion and more, but such person might not have enough time, from 2 to 4 hours a day to focus in the project and give quick responses to the nearshore team; or worse, it response real quick but inaccurate or without taking the time to think the consequences of the decisions in time, cost and product target. For such reason, have particular attention to communication channels and choose the right product owner for such channels.

• Place the contact info accessible for everyone: name, roles, phone, and email
• Have a desktop chat group tool, for example, Slack, Skype
• Key and hectic people must have the tools in their smartphones also
• Established where all the project documentation, assets, charts, draws, draft documents, videos, audio are going to be stored
• Have a mobile soft chat group, WhatsApp or Instagram, it sounds like a social chat, but is tremendously effective for the project, coordinate, make decisions rapidly, know better the team and have free international calls over data
• The firm must assign an account manager or a single point of contact, that person must believe and know in very deep detail your project and expectations. This person will work every single day to guarantee the quality of the final version of your digital product or service

Do not avoid ndas (non-disclosure agreements), contracts, and sows

This is a business, take time to read and clarify non-disclosure agreements, it helps to protect your service, ideas, and info. In latam countries and Costa Rica in particular, digital firms are highly motivated by technical challenges and end applications of it, they’re proud of the impact of the technologies developed by themselves, also, because of intellectual property and patents are not the top motivation of IT firms in this area; the risk of information or product stealing is very low, but still sign a nda. In another hand, do no worries so much about creating a contract for your product or service, instead of managing a contract for the service delivery and business rules. In separate, prepare sows, statement of work or exhibits of work to actually describe the business details of the project.

• SOWs must include the parties responsible, services and products to be delivery, time estimation, general work plan, the physical location of the teamwork, payment procedures, acceptance criteria
• Make sure lawyers with international experience check the contracts
• Ask for information about country taxes, social security, and liability; it is different in each country, then you will know what are you paying for
• Inform yourself about IT rates in the countries, ranges go from $20.00 to $300 hourly depending on what are you looking for
• Clarify in the sow checkpoints of project progress, each 3 weeks maximum is recommended

Ensure the payment flow of what you owe

Suppose your project will require 5 people in your nearshore IT team. Salaries in the digital world are very competitive, from $2k to $7k depending on the professional profile, plus taxes, social security, office management, and others; your project can easily cost to the IT firm approximately $30,000.00 per month without revenue. If you start a project without the correct cash flow your project will eventually delayed, because the IT firm won’t let such risk to go higher.

• Most of the digital firms in LATAM have international bank accounts for transfer purpose
• If you want to transfer to one specific account or bank in your own country request to the firm to open an account there
• Be aware of transfer fees and agree who’s going to pay them
• Don’t pay by wire check, take too long to arrive at its destination and banks perform a lot of cross-checks before actual credit it
• Ask the IT firm to provide you with information about international trades of both countries, in some cases it helps to save money in some taxes
• Electronic transfer such PayPal, Stripe or similar should do the trick, but many times the transfer fee from electronic to banks is too high or limited to low amounts of money