Agile software development demand could put nearshore IT in the spotlight

The Millennium bug is always credited with putting offshore IT services providers in India on the world stage. Big businesses needed lots of software development done quickly in preparation for Y2K when they feared computer systems would crash when the date change to 00.

This propelled Indian software firms onto the world stage and they haven’t looked back.  Today there is an increasing interest in nearshore locations such as in Eastern Europe. These regions offer well educated software development at a lower cost and they are not that far away geographically or culturally.

From meetings I have had with suppliers in eastern Europe as well as feedback from their customers it seems that they are seen as a trusted source for agile software development.

Demand for agile software development skills is growing fast.  According to research from CWJobs that I recently wrote about, it will soon be one of the most in demand software skills. (see table below for CWJobs’ figures.)

But is insourcing, outsourcing, offshoring or nearshoring the best option for businesses hoping to take advantage of the software development methodology.

Agile software development requires development teams and users communicating all the time.

The flexibility and constant testing makes it a challenge to succeed using agile software development techniques if groups of people are not in close contact during work time. You can’t really do a scrum over thousands of miles.

This introduces major challenges for businesses outsourcing never mind offshoring.

I met a company last year based in Romania and Moldova. Endava has customers including Cadbury and Endsleigh Insurance who use it in part because of its agile software development capability. Nearshore locations are less costly than onshore services but are often seen as less risky than offshore.

Because central and eastern Europe are close to the UK both geographically and culturally Agile software techniques are easier.

One source said that distance and cultural differences can be a problem in agile development projects. “I advised on an agile software development project that went badly wrong. The customer was UK-based, and the supplier was in India. It proved to be very difficult to use agile principles when there were both geographical and cultural differences.”

But companies are reporting good results from nearshore locations. .Jason Collins, IT development centre manager at Endsleigh, said the internal team stretched when the company is preparing for the new intake of university students every year. “Agile development is critical because Endava and Endsleigh had to be in constant contact during the project, so requirements and changes could be immediately communicated and deadlines met,” he added.

See CWJobs’s latest figures on software jobs advertised.

IT permanent software skills advertised: Q3 2008-Q3 2012

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Software Q3 2012 Q3 2011 Q3 2010 Q3 2009 Q3 2008
SQL 20,960 20,046 18,279 17,284 25,402
C 14,201 15,131 15,043 12,871 18,961
C# 13,780 12,783 11,361 8,817 15,098
.Net 12,388 11,648 10,322 8,037 14,537
Java 9,856 8,758 7,237 6,140 12,289
SQL Server 9,079 8,523 8,414 7,817 13,344
ASP 8,334 7,891 7,777 6,754 11,143
Javascript 6,948 6,582 5,365 5,343 6,807
HTML 6,570 6,228 5,268 5,944 7,815
Agile 6,441 5,767 3,283 N/A N/A

How are you using agile software techniques?

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For our UK and EU cousins, nearshoring means using software development resources in Eastern Europe. From here in North America nearshoring means having a software development team in Latin America. The costs are not as low as programming teams in India and other parts of Asia but the cultural similarities and time zone overlap contributes to a lower total cost of engagement once you figure in the higher productivity and lower travel costs.

Nearshoring does contribute to success in using Agile and Scrum methodologies. It is more difficult to do a daily standup meeting when the product owner and the software development team are many time zones away. We have many North American clients who are doing Agile development with nearshore partner companies in Argentina, Colombia, Costa Rica and Mexico. We work with great companies in India and China too which is nearshore for Australia, and they are a good fit for some client engagements where daily interaction is not required.