Will the terms Offshore/Nearshore become obsolete?

From the millennium bug to the pandemic and offshore/nearshore to distributed remote teams.

In his book The World is Flat, Thomas Friedman presented an interesting viewpoint on the combination of factors that created a new leveled playing field for companies worldwide. Despite significant time zone differences, several North American and European companies mainly started using software development companies in Asia. Adoption of the offshore software development engagement model began worldwide, solving client needs and providing opportunities for providers. This model presented an attractive alternative to local solutions because of lower costs. 

The millennium bug required bug fixing and updates worldwide – in systems, applications, and software products. At the same time (around 2000), we saw exceptional growth in internet-based companies (the dot-com era). The millennium bug meant reworking and bug fixing – updates required due to a lack of long-term planning. It was not based on product evolution or creating new solutions. The overall strategy involved keeping internal teams focused on new initiatives, with offshore teams responsible for updates and bug fixes. With cost as an essential consideration, the offshore software development model met the perfect conditions to evolve:

• Millennium bug: A massive demand for software updates and bug fixing globally.

• The critical importance of cost savings. 

• The global availability of the internet.

The offshore model quickly proved its value, and variations appeared, such as the nearshore software development model. In this model, teams in different regions are relatively close in proximity and may even share a time zone. 

Offshore and nearshore software development models have become a common outsourcing strategy across the globe. 

At the end of 2019, something unexpected happened – the rapid spread of the COVID-19 pandemic. On March 3, 2020, we decided to work at home for several weeks to protect ourselves from the virus. What started as weeks turned into months and years.

A new and powerful confluence of factors emerged to transform and profoundly disrupt how we worked. The pandemic forced us to adapt to a new way of work in just days. While we used to travel to have one-hour meetings in other cities, we quickly learned to work remotely using tools such as Meet, Zoom, and Teams.

We expected that layoffs would result. In the IT area, however, the opposite occurred. Before COVID-19, IT was already facing a talent shortage worldwide. Many startups, digital business models, and digital transformation initiatives added to existing solutions' maintenance and evolution requirements. Shortly after the pandemic began, most companies rushed to adapt to digital models, including e-commerce, digital orders, and counting on delivery solutions. The demand for talent became the number one strategic challenge. Every company, somehow, became digital.

The distributed and remote workforce gained traction due to several factors:

• We quickly learned to work remotely due to the pandemic.

• There was an ongoing difficulty in hiring local talent. 

• The agile culture created better conditions for delivering value from remote work, with less control, more autonomy, and cooperation (between dev teams and clients).

• Companies adapted themselves to hire remote professionals and operate in a distributed environment.

The main challenge was not the cost but the availability of talent.

Companies that avoided relying on offshore providers before are now considering remote teams (remote employees and remote partners/providers). Perhaps the terms offshore and nearshore have become obsolete. Distributed remote teams or providers are a new reality that is here to stay. 

Cost is not the primary driver now; it's the availability of talent. Every company has become digital, and we can work from everywhere. We can go anywhere in seconds. The playing field is level again, but for professionals this time. With talent scarcity, the main challenge is to train new professionals, even from other areas, as soon as possible. Beyond attracting new talents, retaining the existing teams is crucial. Several clues we already have, like giving people an inspiring purpose, autonomy, and space to evolve and unlock their potential. There is a need for a naturally collaborative way of working, not just staff augmentation, in which people are not simply treated as resources to execute tasks. Everyone wants to be part of something meaningful. 

The world is not flat. With this new way of working, the world is small and light-speed interconnected to facilitate collaboration among emotionally engaged, distributed, and remote teams.

---